مجلة البشائر الاقتصادية
Volume 11, Numéro 1, Pages 697-713
2025-04-27
Oil Price Fluctuations And Economic Vulnerability: Challenges For Algeria's Resilience And Diversification
Authors : Korso Sonia . Benbouziane Mohamed .
Abstract
The Algerian economy experienced multiple oil cycles characterized by periods of growth, crisis, and partial recovery during the period 1990-2023. While recent economic growth, particularly in the hydrocarbon sector, reflects Algeria's resilience, the country remains highly susceptible to external factors, especially global oil price fluctuations. This study analyzes the impact of these fluctuations on Algeria's economic performance using the Vector Error Correction Model (VECM). The model explores the intricate relationships between oil prices—measured by the OPEC basket reference—and four key macroeconomic variables: GDP growth rate, DZD/USD exchange rate, Consumer Price Index (CPI), and budget expenditures. Findings reveal that Algeria's economy is particularly vulnerable to oil price changes, significantly affecting the CPI, exchange rate, and government spending. To enhance its resilience against oil shocks, Algeria must prioritize economic diversification and implement macroeconomic stabilization measures.
Keywords
oil prices ; oil shocks ; Algerian Economy ; VECM ; Economic Diversification
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