Bouteflika’s exit will weaken Algeria’s economy: Capital Economics

The decision by Algeria’s President Abdelaziz Bouteflika to step down is likely to result in a long and potentially messy transition for the North African country, London-based Capital Economics said in its latest report on Wednesday.

On Tuesday night, Bouteflika stepped down after almost two decades in power. His decision follows weeks of major demonstrations across the country. High-profile figures in the military had recently called for him to abandon his plans to oversee a national conference on political and economic reforms and to step down immediately.

“At the very least, economic growth will weaken and the chances of a severe balance of payments crisis at some point in the next couple of years are mounting,” the report added.

“Algeria has not adjusted to low oil prices. Budget and current account deficits are large at 6 percent and 9 percent of GDP respectively,” said Jason Tuvey, Senior Emerging Markets Economist at CE.

“FX reserves are falling at a rapid pace – at the current rate of depletion, reserves will last no more than four years,” he added.

However, there will be a negligible economic impact on the rest of the MENA region, the report maintained.