Algeria and Morocco

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Algeria and Morocco Economics and Financials
Morocco and Algeria are developing countries in Africa with unique economies. In an overview of Algeria's economy, the primary challenges that Algeria faces are the instability of oil prices and insecurity issues regarding politics and the society. Despite the draft budget for the year 2016, the country will not be able to overcome the decreasing oil prices and GDP level since the focus of the country is on maintaining social stability. The GDP of Algeria dropped from 4.3% in 2014 to 2.8% in 2015. The inflation rate in the country has no prospect of decreasing, and it is seen to increase from 2.9% in 2014 to 5.5% in 2015. There is also a current account deficit that has increased from -4.5% to -15.8% and constant increase in the unemployment rate (Ayadi, Arbak and Naceur 220).
Algeria has a lot of potentials to boost its economy by tapping into the foreign exchange and investment in oil and gas reserves. Another strategy to promote development is by increasing development and eliminating the high housing shortage in the country. The privatization procedure in Algeria began as early as 1986, where it strived to aggravate economic growth through marginalization of the private sector (Kandogan 651). As such, the capital formation increased from 26.4% to 46.8% between the years of 1974-1977.
Privatization is a continuous process; however, the public corporations are hurting, especially due to the decreasing oil prices (Mohammed Vol 4). In 2005, Algeria signed a trade pact with the European Union, which is currently the country's biggest trading partner. The country mainly trades in chemicals, energy, machinery, and transport equipment, but yet again, the decreasing oil prices affect the trade by reducing it by 3.5%. The trade relations with the European Union promotes the establishment of political and social ties. The customs duty in Algeria varies between 0-30 per cent, and there is a standard VAT of 17% (Helpman 8). Companies and institutions should invest in Algeria due to its cheap and skilled labour, Algeria’s connection to Europe, and the low price of oil and gas. The population trend in Algeria is summarized below (Ayadi, Arbak and Naceur 232).
Figure SEQ Figure \* ARABIC 1 Algeria Population

Similarly, Morocco has a rich supply of resources such as oil and renewable energy, which it aims to increase over the next years. In a brief overview, the GDP in Morocco has increased gradually since 2012 from 2.7% to 3.5% and the GDP per capita is currently at $7,700 (Kar, Nazlıoğlu and Ağır 687). To build a market-oriented economic system, the country established trading ties with Europe and entered into a Free Trade Agreement with the United States in 2006. It primary sectors include agriculture, tourism, aerospace, textiles, apparel, among others.
Morocco is also similar to Algeria in that it is characterized by high levels of poverty, illiteracy, and unemployment. As such, the government has put a lot of effort in maintaining social stability, adopting an industrial strategy in 2014, and encouraging privatization. Privatization began in the early 1990’s and between then and today, the country has earned about MAD 75.5 billion, thus is more beneficial in Morocco than in Algeria (Helpman 10). The country privatizes sectors such as tourism and telecommunications, and airlines, among others. Both Algeria and Morocco engage in water privatization. The economy of Morocco is also character...