Country Report Tunisia October 2009

Outlook for 2010-11

• 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, which could lead to power struggles within the ruling RCD.
• The government is expected to be able to maintain social stability, although it will prove challenging, particularly given the constraints on fiscal outlays.
• The recovery in the global economy following the financial crisis will be sluggish, which is likely to make the government even more cautious than it has traditionally been when it comes to economic reform.
• The government will attempt to cut public spending, which was increased in 2009 to stimulate consumption, and thereby reduce the budget deficit from an estimated 5.7% of GDP in 2009 to an average of 3.7% of GDP in 2010-11.
• We have revised up our forecast for real GDP growth in 2010 to 2%, reflecting an improved outlook for the EU. Growth is expected to stay at around this level in 2011.
• The current-account deficit will remain at around 3.2% of GDP in 2010-11 as trade recovers slowly owing to low demand domestically and in the EU.

Monthly review

• The RCD has orchestrated a widespread publicity campaign to whip up popular support for Mr Ben Ali ahead of the presidential and legislative elections on October 25th. The communications minister has been sacked.
• The dissident opposition has complained about unfair restrictions on the candidates who have been permitted to stand in the elections and about repressive tactics used by the authorities to disrupt their election campaigns.
• Mr Ben Ali has called for regional leaders to do more for security in Africa.
• The prime minister, Mohammed Ghannouchi, has stated in an interview in London that Tunisia still plans to make its currency, the dinar, fully convertible in 2010.
• Tunisia has risen four places in the World Bank's doing business rankings
• The stockmarket index has continued to rise, despite the economic slowdown, creating concerns that a correction may occur in the coming months.
• The current-account deficit has narrowed sharply in the first eight months of 2009 compared with the same period of 2008, according to figures from the Banque centrale de Tunisie (the central bank).

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52