Algeria

The dinar has appreciated steadily against the US dollar since mid-2006 due to a combination of upside pressures. Firstly, the greenback has dropped to record lows against almost all major global currencies. Secondly, surging oil prices have resulted in huge dollar-denominated inflows for Algeria and driven up demand for the domestic currency. Given that oil sales account for around 98% of export revenues, the energy price boom has boosted the current account surplus. We recently revised upwards our oil price forecasts for 2008 and beyond and now expect an average OPEC basket price of US$96.50/bbl in 2008. As a result, we forecast that Algeria's current account surplus will jump to an impressive 52.4% of GDP in 2008, up from our previous figure of 44.3% and an estimated 37.1% in 2007. At the same time, petrodollar liquidity is helping to drive economic growth: we forecast real GDP to expand by 5.0% in 2008, down only slightly from 5.3% in 2007.

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