Country Report Tunisia July 2009

Outlook for 2009-10

• The president, Zine el-Abidine Ben Ali, and his party, the Rassemblement constitutionnel democratique (RCD), are unlikely to face any serious competition in the 2009 elections and are almost certain to be re-elected.
• Following the elections, Mr Ben Ali is likely to begin to groom a successor, and power struggles within the ruling RCD will intensify.
• 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.
• We expect the fiscal position to deteriorate, given weakening revenue growth and a budgeted 12.5% rise in spending aimed at stimulating consumption. The fiscal deficit is forecast to widen to an average of 5.1% of GDP in 2009-10.
• The Economist Intelligence Unit forecasts that GDP growth will slow in 2009 to 0.2%, and that it will pick up only modestly in 2010, to 1.8%, reflecting the gloomy outlook for the EU.
• The current-account deficit will narrow in 2009, as both imports and exports decline, falling to 1.6% of GDP. It will widen in 2010 to 2.7% of GDP as import costs rise at a faster pace than export earnings.

Monthly review

• The trade minister has been replaced, providing the government with a scapegoat for the rapidly deteriorating export situation.
• A broad grouping of Tunisian exiles has called for an amnesty to allow them to return home and Mohammed Abbou, a leading Tunisian dissident, has had a meeting with officials from the French foreign ministry.
• A supplementary budget has been released to account for lower tax receipts and outline plans for increased spending in areas that will boost the economy.
• A new telephone licence for fixed-line and mobile telephone services has been awarded to a consortium of France Telecom and a local company.
• The IMF has stated that Tunisia is well positioned to withstand the global economic crisis as a result of the macroeconomic reforms it has undertaken in recent years and its prudent macroeconomic policies.
• Recent data has shown a sharp contraction in manufacturing output but this has been offset by growth in other areas. Trade has continued to decline sharply although the trade and current-account deficits have narrowed.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;37;70;53;49;82;2834;80;20;22;39
NAICS Code: 52;336;72;44;22;61;3254;62;311;313