The Tunisian economy has just weathered two tough years, and the road ahead looks just as difficult, at least in the short term. Although growth should pick up somewhat thanks to the turnaround in the tourism sector, it will not be enough to bring down the very high unemployment rate. Rising government debt and persistently major external imbalances are also worrisome. Fortunately, the country should continue to receive massive financial support from international donors, providing the IMF programme remains on track.
Growth: a mild recovery is taking shape
According to preliminary estimates, GDP growth barely reached 1% in 2016, similar to Tunisia’s 2015 performance. The years go by and little seems to change, but there are some bright spots that suggest a slight improvement to come.
Not only is agricultural output expected to normalize after slumping 8.1% in 2016 (the primary sector accounts for 8-10% of total GDP), but tourism activity is also showing signs of recovering (see chart 2). Visitor numbers rose 7.7% in 2016, and figures for the first two months of 2017 (+23.6%) further improved. Yet this performance must be kept in perspective. Tourist arrivals at year-end 2016 were still 25% lower than in 2014, and receipts continue to contract.
Moreover, the situation is still very fragile as the terrorism threat remains elevated. Yet given its significant role into the economy, the renewed momentum in the tourism sector should be a key catalyst for faster GDP growth. The authorities also have high hopes for the new investment law, and the first effects of the Tunis Conference, during which Tunisia’s main country’s partners pledged virtually USD 15 bn in project financing for the country’s 5-year development plan (2016-2020). From this point of view, the 11% increase in capital goods imports in the first three months of the year is an encouraging sign.
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by Stéphane ALBY