Algeria’s Economy Shows Mixed Signals in Q1 2025 as It Eyes ASEAN Integration

Watan-Algeria’s economy in the first quarter of 2025 recorded mixed indicators, reflecting on one hand improved performance in vital sectors, and on the other hand, ongoing challenges — especially in the hydrocarbons and foreign trade sectors. This comes as Algeria seeks to open up to economically active regions such as ASEAN, which it has officially joined.

In a detailed report tracking economic performance during the first three months of 2025, the National Office of Statistics reported an economic growth rate of 4.5%, compared to 4.2% in the same period of 2024. The non-hydrocarbon GDP grew by 5.7%, signaling progress in Algeria’s efforts to diversify its economy.

This positive performance is mainly driven by sectoral rebounds:

• Agriculture value-added rose by 6.1%, boosted by land reclamation campaigns.

• Food and tobacco industries grew by 5.6%.

• Leather and footwear industries jumped by a notable 15.4%.

• Trade increased by 8.9%, and transport & communications by 8.3%.

Domestic demand surged, with total internal demand rising by 10.4%, compared to 7.5% a year earlier. This was mainly due to a 13.9% increase in fixed investment and a 4.7% rise in household consumption. In contrast, public administration consumption slowed to 0.8%, down from 3%.

Despite this internal momentum, some sectors continued to underperform:

• The hydrocarbon sector declined by 2.8%, with oil and gas extraction falling 1.5%, and refining activity dropping by 5.5%.

• The sector’s nominal value dropped to 1,429.7 billion DZD, down from 1,465 billion DZD in Q1 2024.

In foreign trade:

• Imports rose sharply by 24%, driven by a 26.3% increase in goods imports and 5% in services.

• Exports fell by 3.8%, including a 2.9% drop in hydrocarbon exports and a 13.4% plunge in other goods.

• Service exports, however, improved by 2.8% after a decline in 2024.

The nominal GDP rose by 8%, reaching 10,047.4 billion DZD, up from 9,303.8 billion DZD in Q1 2024. This reflects a general price level increase of 3.3%, which is lower than the 4.3% inflation recorded in Q1 2024.

Other sectors showed mixed performance:

• Industry grew by 5.5%, especially in non-ferrous metallurgy, textiles, and clothing.

• Electricity and gas expanded by 4.3%, down from 5.4% last year.

• Construction and public works value-added rose 3.1%, slightly less than the 3.3% in 2024.

These contrasting indicators present a complex economic picture: strong dynamics in non-oil sectors and domestic demand, yet persistent reliance on hydrocarbons and a growing import bill.

As a result, the Algerian government has introduced new measures to curb imports and regulate foreign trade to preserve foreign currency reserves and support local production.

Import operations — particularly for operational and capital equipment — are now conditional on submitting a forecasted import program for Q2 2025, approved by the Ministry of Commerce.

The Ministry of Foreign Trade also required all domestic companies involved in importing production inputs or equipment to submit their plans by July 31, 2025. Additionally, service imports now require prior authorization from the same ministry.

These actions add to years-long efforts to tighten import control and reduce dependency on foreign markets. Algeria’s import bill has averaged $40–50 billion annually over the last four years, down from around $60 billion before 2019.

Algeria’s long-term strategy now focuses on expanding into new export markets, aiming to exceed $10 billion in non-oil exports. In line with this, Algeria officially joined the ASEAN Treaty of Amity and Cooperation last week, with unanimous support from member countries.

According to the Algerian News Agency, the move carries political and diplomatic significance, offering Algeria a platform for regional coordination and reinforcing its commitment to international law, peace, and cooperation.

Malaysian Prime Minister Anwar Ibrahim, who currently chairs ASEAN, welcomed Algeria’s accession and affirmed Malaysia’s commitment to deepening bilateral ties.

Algerian media echoed economic analysts highlighting the strategic importance of this step, as it opens doors to diversified international partnerships, especially in technology, energy, agriculture, and industry.

Joining ASEAN is also viewed as a lever to boost non-hydrocarbon exports and attract foreign investment by integrating with one of the fastest-growing economic regions, now the 5th largest economy globally.