BMI View : Falling global oil prices have had a huge impact of government revenues in Algeria, in turn resulting in delays to major public infrastructure projects and a downturn in private investor interest in the leading oil and gas sector . The country's large infrastructure deficit, particularly in terms of residential and social infrastructure, will ensure some level of growth is maintained over the forecast period. Similarly, government moves to diversify the economy by expanding domestic production/manufacturing capacity and establishing a position as a regional trade hub will attract some level of investment, particularly from increasingly important economic and trading partner China.
Forecasts and Latest Updates
Earlier in 2015 the government announced plans to invest USD215bn on infrastructure during 2015-2019. The funds will primarily be spent on hospital construction and renovation, transport infrastructure, ports/airports, and wastewater management and desalination as part of ongoing attempts to quell social unrest and stimulate economic growth.
With oil revenues declining by 50% in 2015, Algeria has however cut the 2016 government budget by 9% and is increasingly reliant upon reserves to bolster public spending plans. As such it is unclear if the 2015-2019 development plan will be fully enacted and we have revised downwards our forecasts for growth in the construction sector with construction industry value expected to show real growth of 2.87% in 2016, followed by average annual growth of 4.8% over the remainder of the forecast period to 2025.
Budget constraints mean that several projects, such as the 8km northern extension of Algiers metro Line 1 have been put on hold. Studies on the nine-station extension from Place des Martyrs to Chevalley had been concluded, but Entreprise Metro d'Alger (EMA) does not have the financing in place to proceed with works.
|f = BMI forecast. Source: Bank of Algeria, BMI|
|Construction Industry Value, Real Growth, % y-o-y||5.40||2.87||3.96||4.49||5.05||5.02||4.99|
|Construction Industry Value, % of GDP||11.7||11.3||11.5||11.4||11.4||11.5||11.6|
|Construction industry value, DZDbn||1,989.50||2,146.03||2,327.67||2,525.32||2,753.86||3,002.23||3,272.15|
Algeria is ranked sixth in the Middle East and North Africa region on the Infrastructure Risk/Reward Index with a score of 57.7 out of 100.
The country offers a relatively strong Rewards profile due to high levels of government expenditure and extensive supporting infrastructure.
Risks are high however, with corruption and high levels of bureaucracy ongoing deterrents to potential investors.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Algeria Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Algeria Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Algerian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Algeria to test other views - a key input for successful budgetary and planning in the Algerian infrastructure market.
- Target business opportunities and risks in the Algerian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Algeria.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.