Outlook for 2011-15

• The president, Abdelaziz Bouteflika, will continue to dominate political decision-making until the end of his mandate in 2014. We expect tensions within the political leadership to persist, particularly over succession.
• The threat from Islamist militants will remain but is unlikely to destabilise the government. Civil unrest over poor economic and social conditions for many Algerians will be a more pressing concern for the government.
• The government is committed to a large five-year investment programme aimed at developing the skills base and improving infrastructure. We forecast small fiscal deficits, averaging 3.1% of GDP, throughout the forecast period.
• Real GDP growth will average 4.1% in 2011-15 on the back of government spending and investments in the energy sector. Weak demand in Europe for hydrocarbons and lower gas output will act as a damper on growth.
• Banque d'Algérie (the central bank) operates a managed float of the Algerian dinar. We expect it to gain ground on the euro in the forecast period, making imports of food in particular cheaper.
• Energy exports will continue to dominate the current account. The services and income deficits will expand as energy and construction companies repatriate profits. Nevertheless, we expect current-account surpluses in 2011-15.

Monthly review

• Said Bouteflika, the brother of the president, is reported to be selected as the head of a new political party. Said has neither confirmed nor denied the appointment.
• Algeria's place in the Economist Intelligence Unit's democracy index has improved slightly owing to a strong political culture and relatively free press. The strengthening of the executive keep it classified as authoritarian however.
• The energy minister has announced that Algeria will pursue an alternative energy strategy. Algeria plans to have 40% of electricity sourced from alternative sources by 2020.
• The sale of Djezzy, the local brand of Egypt-based Orascom Telecom, will probably go to arbitration, as neither the government nor Orascom appear able to find a middle ground on price or conditions for the sale.
• The government has not authorised BP, a British oil and gas company, to release data about its Algerian operations. The government's hindrance may mean BP will have a difficult time selling its gas operations in the country.
• The government expects growth of 4% in 2011. The government's forecast of large fiscal deficits seems unlikely, given the low budgeted oil price.