Algeria’s economy is on track to grow faster than initially expected in 2025, according to the latest World Bank report published on December 4.
The report, titled “Algeria Economic Update: Responding to Climate Challenges and Supporting Sustainable Development – Fall 2025,” highlights the resilience of non-hydrocarbon activity and the impact of productive investment on the country’s growth trajectory.
In its new update, the World Bank revised Algeria’s GDP forecast upward to 3.8% for the full year, after the economy expanded by 4.1% year-on-year in the first half of 2025.
According to the report, this performance reflects strong household consumption, the dynamism of the services sector, and a resilient agricultural output. Meanwhile, despite a –2.0% contraction in hydrocarbon GDP during the first half of the year, diversification efforts helped offset the decline.
The report notes that Algeria’s Solid performance is largely driven by surging investment, whose growth rose from 9.8 percent in 2024 to 13.2 percent year-on-year in the first half of 2025. Household consumption also remained strong, showing a 4.4 percent year-on-year growth following a 3.9 percent expansion in 2024.
On prices, Algeria continues to record a sharp decline in inflation. After 9.3% in 2022 and 2023 and 4.0% in 2024, inflation dropped to 1.7% year-on-year over the first nine months of 2025, thanks mainly to lower food prices. This disinflation has helped support purchasing power and revive domestic demand.
To accompany the economic momentum, the Bank of Algeria eased its monetary stance, lowering the policy rate from 3% to 2.75% and the reserve requirement from 3% to 2% in late August 2025.
