Morocco and Algeria are developing countries in Africa with unique economies and financials. The paper below will compare and contrast the economic situation in both countries. 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 is 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 trading 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 promote the establishment of political and social ties.