- The economy grew by an estimated 3.1% up from 2% in 2015 despite a sharp fall in the price of iron ore.
- The economic outlook is more favorable in the short and medium term, thanks to higher projected industrial and mining output, good performances in agriculture and fisheries and continuing structural reform.
- An improved business climate is vital for the emergence of a true local entrepreneurial class that can speed up industrialization and create decent jobs thereby reducing poverty and social inequality.
The economy grew by an estimated 3.1% in 2016 (after slowing to 2% in 2015), driven by the primary sector and a recovery in mining, with the primary sector contributing a bigger share (29.1%) of gross domestic product (GDP) (slightly up on the previous year’s 28.6%). Mining accounted for 5.6% of real GDP (up from 4.9%), mainly thanks to the opening of the Guelb II iron mine and promotion of the country’s geological and mining potential. Manufacturing’s GDP share rose by 0.2 percentage points to 6.7%, but this was still below the 10% or so it contributed before 2005. The tertiary (services) sector continued to grow and was the biggest part of real GDP (35%).
The economic outlook is fairly good in the short and medium term, thanks to higher output by the SNIM, good performances in the irrigated agriculture sub-sector (because of new farmlands) and fisheries, ongoing investment in growth-promoting infrastructure and in human capital, and continuing structural reform.
Macroeconomic gains were consolidated in 2016, with inflation still low (1.9%) mainly the result of only slightly higher food prices and control of the money supply. The budget remained in good shape, with a manageable overall deficit of about 3.3% of GDP (3.5% in 2015). Official reserves remained satisfactory at the end of 2016, at the equivalent of some 6.6 months of imports. The current account deficit continued improving, to 15.8% (down from 20% in 2015).
But the country is still vulnerable through its dependence on raw materials and from a persistently inadequate business climate. Greater efforts are needed to diversify the economy and make it more resistant to external shocks, and to improve the business climate, without which more and better private investment cannot be attracted. Further reforming the financial sector and making it more dynamic should produce new opportunities, especially for small and medium-sized enterprises (SME) by improving access to funding and expanding financial services.