Top-Rated Debt Collection Agency in Algeria

The economic risk in Algeria

Economic risk in Algeria is high (5 out of 6). An economic risk of 5 out of 6 is pretty average in Africa.

GDP and economic growth are critical drivers for economic risk.
The GDP of Algeria is 167,98 bn. USD (2021), growing by 3,85% per year.

In terms of the size of its economy, Algeria ranks #56 out of 183 countries and has a medium-sized economy.

In terms of growth rate, it is ranked #106 out of 183 countries and is therefore considered an excellent growing economy.

GDP per capita is 3765 USD, ranking Algeria number #112 out of 183 countries. This means the purchasing power of citizens in Algeria is pretty average compared to all the countries in the world.

You can see a more detailed picture of GDP and economic growth in Algeria in the table below:

Another big impact for the risk score is the inflation rate and the interest rates. You can see a more detailed overview of monetary data points in Algeria in the table below:

The inflation in Algeria was 7,2% in 2021 which is considered a high inflation rate.

The interest rate for businesses is 8%.

The business environment risk in Algeria

Our analysis shows that the business environment risk in Algeria is high (5 out of 6), which is a pretty average risk score in Africa.

Economic freedom and rights determine the business environment risk in a country. You can see the critical facts for Algeria in the table below:

As you can see in the table, the property rights index is 34 in Algeria, which is considered low in Africa.

The business freedom index is based on 10 indicators, using data from the World Bank’s Doing Business study. The Index is 64 in Algeria, a pretty good score for a country in Africa.

Algeria's overall economic freedom index is 50 out of 100 and is based on factors such as the rule of law, regulatory efficiency, and market openness.

The political risk in Algeria

The political risk in Algeria is high, with a score of 5/6. This is a pretty average political risk score in Africa.

The governance and political stability indicators are vital drivers for political risk. An overview of Algeria can be seen in the graphs below:

The rule of law index analyses to which extent agents have confidence in and abide by the rules of society, in particular the quality of contract enforcement, property rights, the quality of the courts, and the police's ability to enforce court orders.

When doing business in a country, the rule of law index is critical as it describes your ability to enforce commercial contracts.

In Algeria, the rule of law index is at -0,82 points, with the score going from -2.5 (weak) to 2.5 (strong). Algeria has, therefore, a very low rule of law index, which means it is often close to impossible to enforce your contracts. We, therefore, recommend avoiding credits and recommend charging upfront payment instead.

Other drivers for the high political risks are the very weak control of corruption, the very weak political stability index, and the medium-large shadow economy that is 23,98% of Algeria's GDP.

The commercial risk in Algeria

In Algeria, the commercial risk score is 2/4, which in our model is a low score. This low commercial risk score is pretty average compared to the average in Africa.

The commercial risk is impacted by a country's international trade relationships. You can see some of the key facts for Algeria in the table below:

Algeria has a foreign exchange reserve of 56.21 bn. USD.

Algeria has a negative trade balance of -0,2% of GDP. This means that Algeria imports more goods and services than the country exports.

The annual growth of exports of goods and services has been growing 9,14% annually - now 25,03% of GDP. Import of goods and services represents 25,23% of the GDP in Algeria.

The financing risk in Algeria

We have calculated the financing risk to be 3/4, which equals a medium risk. A medium financing risk score is pretty average for countries in Africa.

The country's banking system, efficiency, and stability influence the financing risk. Additional facts and info can be found for Algeria in the table below:

In Algeria, the credit information sharing index is 0 on a scale from 0 (low) to 8 (high). The consequence of that number, is that the access and quality of credit information available in Algeria is very low.

This makes it very difficult for you to understand the credit risk of your counterpart in Algeria. Unless you have a strong relationship with your customers in Algeria, we highly recommend charging payment upfront or using credit insurance.

Your rights as a creditor are 2 out of 12 and, therefore, very weak.

The medium financing risk for creditors also impacts the high interest rate in the private sector of 8%.