Algeria's external account will continue to be dominated by oil and gas exports in the forecast period. The surplus in the trade balance will average US$23.9bn in 2011-12, up by 34.4% from 2010, as oil prices are boosted by concerns over supply from unrest in the Middle East and North Africa, and increased demand in emerging markets. The trade surplus will moderate slightly over the rest of the forecast period, as growth in imports outpaces exports owing to the government's need for capital inputs for its investment programme.

Remittances will remain an important non-merchandise inflow but will be dwarfed by non-merchandise outflows, as efforts to diversify the economy will continue to draw in foreign inputs. Profit repatriation, largely associated with the energy sector, will be the main debit on the income account, ensuring it remains in deficit despite earnings from Algeria's massive foreign assets (official and unofficial). We expect the current-account surplus to average 4.6% of GDP in 2011-12 based on high oil prices in 2011. It will then average a deficit of around 1.3% of GDP over the remainder of the forecast period as the country will require more foreign inputs for the government's investment programme.