Algorithm analysis is the process of evaluating the efficiency and performance of an algorithm. It helps determine how well an algorithm performs in terms of time and space requirements as the size of the input data changes. This analysis is crucial for selecting the most suitable algorithm for a given problem. There are two main aspects of algorithm analysis: time complexity and space complexity. Time complexity measures how the execution time of an algorithm grows with the input size, while space complexity assesses the amount of memory an algorithm uses. Understanding these factors aids in optimizing algorithms for better performance.