Page 40 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.82, # 2, 2025, pp. 32-60

Unemp Exp
30 4.5E+10
25 4.0E+10
20 3.5E+10
15 3.0E+10
10 2.5E+10
5 2.0E+10
2000 2005 2010 2015 2020 2000 2005 2010 2015 2020
Inflation Oil_price
10 120
8 100
6 80
4 60
2 40
0 20
2000 2005 2010 2015 2020 2000 2005 2010 2015 2020
GDP
9E+12
8E+12
7E+12
6E+12
5E+12
4E+12
2000 2005 2010 2015 2020
Figure1: Variable dynamics over the period (2000-2023)
Source: By author

In terms of macroeconomic imbalances, the unemployment rate fell significantly between
2000 (29.77%) and 2008 (11.33%), a period of rising oil prices and massive public
investment. However, after 2009, the fall in unemployment slowed, and moderate
fluctuations appeared, notably in connection with the oil crises (2015-2016) and the
pandemic (2020), which pushed unemployment back up to 14.06%. Inflation, meanwhile,
remains relatively unsTable, with significant peaks such as in 2012 (8.89%), 2021 (7.22%)
and especially 2022-2023, when it exceeds 9%, reflecting heightened inflationary pressures
in a context of external shocks, supply disruptions and perhaps accommodating monetary
policy. Overall, this period illustrates the structural vulnerabilities of the Algerian economy,
highly exposed to oil price fluctuations and dependent on public spending to sustain growth
and contain social imbalances.

Correlation analysis between variables
The correlation matrix highlights several interesting relationships between the
macroeconomic variables of the Algerian economy. Firstly, there is a strong negative
correlation between the unemployment rate (UNEMP) and real GDP (LPIB) (0.792),
confirming the existence of an inverse relationship between economic growth and
unemployment, in line with Okun's law. Unemployment is also negatively correlated with
public expenditure (EXP) (-0.710) and the price of oil (-0.726), reflecting the central role of
the state and oil revenues in supporting employment in Algeria.

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