Oil and gas still account for an overwhelming share of Algeria's economy - 97.7% of exports - and will probably remain the country's main strength for years to come. With the world's eighth largest proven gas reserves and the third largest oil reserve in Africa, the potential of the sector is huge.
The country also reopened its doors for exploration in 1993 and after six international licensing rounds for exploration, several multinationals, including BP, have made substantial strides in investing in Algeria. A seventh bidding round is expected in the first half of 2006.
To balance this frenzy in hydrocarbons, Algeria is pressing ahead with alternative energy plans, particularly solar. Considering its geography, with 2.4 million square kilometres exposed to the Saharan sun, the country has one of the highest solar power potentials in the world, already producing 169,000 terawatt-hours a year.
Algeria is also working hard to encourage foreign investors in all kinds of sectors. It has just launched the largest privatisation wave in its history, including the sale of majority stakes in two of the country's biggest banks. By modernising the banking sector and inviting foreign investment, the government hopes to promote a business-friendly environment and leave its terrorist-ridden image well behind.
Its Plan Complémentaire de Soutien à la Croissance (PCSC), often referred to as Algeria's Marshall Plan, which envisages the investment of $55,000 million in infrastructure and social services between 2005-09, should crown this drive for a fresh start.
Algiers, the capital, is already showing signs of economic recovery - there are traffic jams at all hours of the day, British Airways started flying there a year ago and hotels are full. Tourism has never been big in Algeria, but the country's potential is huge with 1,000 km of Mediterranean coastline, sunshine all year round, sand dunes and mountains.
French hotel group Accor, which has been around since 1992, is now making plans to develop its infrastructure, be it for business or leisure travellers. Things are definitely looking up for Algeria.
Source: Special report: Algeria
Middle East Economic Digest, Vol 50 No 3
Review by Emilie Filou