What a shortage of cars says about Algeria

IN MOST PLACES a new car is a bad store of value. Its resale price plummets the moment it is driven out of the dealership. But not in Algeria. Hassan Houicha has been getting offers to buy his Volkswagen for the same sum he paid for it in 2013. Still, he refuses to sell. “What if I can’t find another car?” he says.Algeria has a problem. It does not produce cars. Yet, in an effort to keep hard currency in the country, it banned car imports in 2016. To no one’s surprise, this caused a shortage. Such shoddy policies are typical of how the government is handling a stubborn current-account deficit and resulting hard-cash crunch (see chart). Its capricious actions increase volatility in a country that toppled its autocrat in an uprising two years ago, and where the economy shrank by 5.5% in 2020.