Forecasting the Role of Renewable Energy on Algeria's Economic Stability: ARIMAX Model

Abstract

This study investigates the impact of integrating renewable energy sources on Algeria's economic stability by 2030. Given Algeria's heavy reliance on fossil fuels, which constitutes 95% of its export revenues, the nation faces significant economic vulnerabilities due to global oil price fluctuations. Utilizing Python 3.12.3 to implement the ARIMAX model, this research analyzes economic data from 1970 to 2022 to forecast GDP growth, considering variables such as inflation, crude oil prices, and the share of renewable energy in the total primary energy supply. The findings suggest that incorporating renewable energy could enhance Algeria’s economic resilience, potentially contributing an additional 2% to GDP by 2030. This study underscores the critical need for strategic investments in renewable energy, emphasizing that this shift is not just an environmental imperative but a cornerstone for ensuring sustainable development and long-term economic stability.