Algeria: Protectionist Stance

5 min
Stephane Colliac
Stephane Colliac Senior Economist for France and Africa

The die is cast. Protectionism is the A-Word of 2018 and not only in the U.S. A new (old) kind of protec¬tionism is (again) on the rise: administrative limits to imports in countries running significant external deficits and stuck in protracted low growth periods. Algeria easily qualifies for this criterion (we expect a current account deficit of -10% of GDP and growth of +2.7% in 2018) and just implemented the (bad) medicine. In fact, Algeria lost the plot in terms of attractiveness even before the recent move. A survey made in Q1 2018 (our French exporters’ barometer) shows that Algeria lost its position in the top 10 ranking of the most promising export destinations – quite a paradox in a year where higher oil prices would have been positive for the country. The new measures enacted will not revert the fall: a 60% to 200% levy will be applied on a wide range of finished goods. The goal is import substitution, but scarcities may well arise and become a downside risk to our +2.7% growth forecast for 2018.