Algeria Economy Rocked By One-two Punch
Sumaira FH 2 months ago Sun 09th August 2020 | 10:20 AM
Algiers, Aug 9 (UrduPoint / Pakistan Point News - 9th Aug, 2020 ) :Currency depreciation, inflation, negative growth, businesses closed: Algeria's economy has been battered by the one-two punch of the coronavirus crisis and tumbling oil revenues.
And unless remedial action is taken on a massive scale, a slide into foreign debt will become inevitable, economists warn.
The National Office of Statistics (ONS) has reported a 3.9 percent fall in Gross Domestic Product (GDP) in the first quarter alone, with unemployment nearing 15 percent -- "alarming" figures, according to Mansour Kedidir, associate professor at the Higher school of Economics in Oran.
Excluding the energy sector, GDP fell by 1.5 percent year-on-year in the 1st quarter, against an increase of 3.6 percent last year compared to Q1 2018.
The construction sector, a major provider of jobs, has been paralysed for months.
Private sector losses have yet to be assessed, but many closed businesses, including restaurants, cafes and travel agencies, risk bankruptcy.
Algeria faces an "unprecedented economic situation", said Prime Minister Abdelaziz Djerad, who has also blamed mismanagement under the rule of ousted longtime president Abdelaziz Bouteflika.
2 percent this year.
Kedidir predicts that unless reforms are brought in, "a Pandora's box will be opened... riots, irredentism, religious extremism".
Experts say any solution will require drastic reforms.
Kedidir urged authorities to introduce lower interest rates, accounting for the informal sector and tax cuts based on the number of new jobs created.
He called for major projects such as agro-industrial zones in the country's vast desert south, with processing infrastructure, extended railways lines and new towns to service them -- all built with local manpower.
While acknowledging that hydrocarbons will remain the main revenue source for the next 5-10 years, an exit from the economic crisis must be based on new national and decentralised governance, says economist Abderahmane Mebtoul.
Algeria must "bring together all political, economic and social forces... (and) avoid division on secondary issues", he said.
Mebtoul appealed for "a state-citizen symbiosis involving elected officials, companies, banks, universities and civil society in order to fight against a paralysing bureaucracy".