October 27, 2011 / 5:29 AM / in 6 years

IMF sees Algerian economy growing 3 pct in 2012

(Reuters) - Economic growth in Algeria is likely to reach around 3 percent next year with fiscal policy set to remain expansionary, the International Monetary Fund said on Wednesday.

An Algerian man buys fruits at the Bab El Oued market in Algiers March 10, 2010. REUTERS/Louafi Larbi

“Monetary policy in 2012 should remain geared toward controlling excess liquidity and inflationary pressures that could emerge following significant increases in public-sector wages,” the IMF said in a statement after talks with authorities.

Algeria’s budget forecasts put economic growth at about 4.7 percent next year and inflation at about 4 percent.

The IMF said Algeria’s economy continued to be buoyed by strong public investment, after a spending spree this year prompted by “Arab Spring” revolts in countries such as Egypt, Tunisia and Libya.

Non-oil growth would likely reach 5 percent this year and next, the Fund said, forecasting that inflation would remain a moderate 4 percent this year despite fluctuations in fresh food prices, the Fund said.

“Medium-term prospects remain favorable, provided ambitious reforms are pursued,” the IMF said, adding: “However, the outlook is subject to certain risks.”

The biggest risk to Algeria’s economic outlook, the IMF said, was if the global recovery slows further, depressing petroleum prices for some time. The country is one of the European Union’s biggest suppliers of natural gas.

The IMF made no mention of the economic impact to Algeria from the civil war against Muammar Gaddafi in neighboring Libya.

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