Country Report Tunisia April 2009

Outlook for 2009-10

• The president, Zine el-Abidine Ben Ali, is unlikely to face any serious competition in the 2009 election and is therefore almost certain to be re-elected. He is subsequently likely to begin to groom a successor.
• Despite recent protests over unemployment and rising food prices, the government is expected to be able to maintain social stability, although it will prove challenging, particularly given the constraints on fiscal outlays.
• The global financial crisis and its wider economic fallout are likely to make the government even more cautious than it has traditionally been when it comes to economic reform.
• The Economist Intelligence Unit forecasts that GDP growth will slow in 2009 to 2.2%, and that it will pick up only modestly in 2010 to 3.5%, reflecting the gloomy outlook for the EU.
• We expect the fiscal position to deteriorate, given a budgeted 12.5% rise in spending aimed at stimulating consumption and the weakening of revenue growth. The fiscal deficit is forecast to widen to 4.2% of GDP in 2009-10.
• The current-account deficit will narrow in 2009, as both import and export earnings decline, falling to 2.1% of GDP. It will widen modestly in 2010.

Monthly review

• An amendment to the electoral law that will increase the proportion of seats reserved for the opposition parties from roughly 20% to 25% has come into force in time for the 2009 election.
• In a renewal of an earlier pledge, in which he promised transparent and democratic elections in October, Mr Ben Ali has announced that foreign observers will be allowed to monitor the poll.
• The government has taken measures to stimulate the economy, including borrowing US$250m from the World Bank to provide finance for private companies.
• The government has drawn up a new strategy for the tourism sector, although it differs little from previous ones.
• A raft of recent economic indicators, most notably falling industrial exports, has suggested that economic growth is continuing to slow.
• The value of overall trade declined sharply in the first quarter of the year, although the trade deficit narrowed slightly in year-on-year terms.
• The current-account deficit narrowed in January-February as tourism receipts and remittances remained surprisingly buoyant.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;1;15;70
NAICS Code: 52;11;23;72