Algeria’s economy is demonstrating resilience, particularly in its non-hydrocarbon sectors, according to a recent economic monitoring report from the World Bank. The report highlights a period of sustained and robust growth outside of the oil and gas industry during the first half of 2025.
Real GDP growth reached 4.1% year-on-year, fueled by strong investment and private consumption. This positive trend is attributed to economic reforms initiated under President Abdelmadjid Tebboune, fostering diversification and sustainable development.
The World Bank emphasizes that this growth is broad-based, supported by significant agricultural output and expansion within the services sector. Data indicates that this inclusive growth persisted throughout the first half of 2025.
On the inflation front, Algeria has also witnessed improvements. Inflation continued its downward trajectory, registering at 1.7% year-on-year during the first nine months of 2025. This moderation is primarily attributed to declining food prices.
In response to these positive developments, the Bank of Algeria reduced its key interest rate from 3% to 2.75% at the end of August 2025. It also lowered the mandatory reserve ratio from 3% to 2%.
Looking ahead, the international institution anticipates continued strong growth in the non-hydrocarbon sector, with a slight acceleration to 3.8% expected for the full year 2025. The World Bank stresses the importance of further diversifying the economy and integrating climate considerations into the development strategy.
Appropriate adaptation policies are crucial to protect production and households from the increasing risks of climate change and water scarcity. In this context, Algeria, under the direction of President Tebboune, has increased the number of operational seawater desalination plants to 19, with a total production capacity exceeding 3.7 million cubic meters per day. This allows for the provision of potable water to approximately 15 million citizens, making Algeria a leader in Africa and second in the Arab world in terms of seawater desalination production capacity. A new program to construct six additional desalination plants is underway following the completion of the initial program.
The World Bank underscores the importance of these initiatives for Algeria’s long-term economic sustainability and resilience.
