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|GDP (current US$)||$46.99 billion||2013|
|Population, total||11.00 million||2014|
Sectors under coverage
Oil and Gas
Tunisia’s political transition made steady progress in 2014, overcoming political deadlock to adopt a new constitution, and holding both parliamentary and presidential elections. The national dialogue platform, brokered by key civil society organizations, played a crucial role in building consensus among all major political parties. This resulted in the adoption of a consensual roadmap that paved the way for the elections which took place peacefully at the end of 2014. The political transition concluded in 2015 with a new government beginning a five-year term and taking the lead in meeting Tunisia’s security and economic challenges.
Economic activity has been slow in the post-revolutionary period, as real GDP grew at 2.3 percent only in 2014, after 2.4 percent in 2013. IMF and World Bank estimate growth rate for 2015 to 1%. The recovery in external demand has been largely absent, reflecting developments in the European Union, while the domestic demand is increasingly affected by tighter macroeconomic policies. The social tensions that marked the first half of 2015, as well as the combined effect of the two dramatic terrorist attacks of the Bardo Museum and the Sousse holiday resort further negatively affected activity in the first half of 2015. This has led the economy into two consecutive quarters of negative quarter-on-quarter growth (-0.2 percent and -0.7 percent). This deterioration is also attributable to production declines in mining (social tensions in the phosphate sector), oil and gas, and commercial services (mainly tourism and transport). Reflecting the slowdown in activity, CPI inflation had eased towards 4 percent in the summer of 2015. Unemployment has slightly increased in 2015, to 15.2 percent, despite a minor decline in graduate unemployment (from 20.8 to 19.9).
While 2014 saw an improvement in the budget deficit to 4.1 percent of GDP (from 6.2 percent in 2013), due to lower spending on subsidies and relatively strong revenue collection, the fiscal stance will temporarily depart from its consolidation path due to the impact of the economic slowdown and the fiscal response to the security shock. The bulk of the consolidation came from lower capital expenditure (4.2 percent of GDP). On the current spending front, the wage bill continues to run at high levels (12.7 percent of GDP in 2014), while subsidies and transfers are declining for the first time since the revolution. Resources to rescue the tourism sector and stimulate investment in other sectors, as well as the implementation of the recapitalization of public banks will also affect the budget deficit, expected to reach 6.3 percent (excluding grants).
The marked current account deterioration of 2014 (8.8 percent of GDP), caused by a widening merchandise trade deficit, has only been marginally reversed in the first half of 2015, as the improvement in the trade balance has been largely offset by a reduction of the service balance surplus. Foreign reserves are stable at relatively low levels (around US$6.6 bn., covering just under three months of imports of goods and services). The Central Bank of Tunisia has implemented a tighter monetary policy since mid-2012 to rein in inflation, but in the context of the current slowdown, it is likely to delay further increases in the policy rate and closely monitor the objective of maintaining inflation below 6 percent. The exchange rate depreciated gradually over 2014 (-15 percent vs. the US dollar and -5 percent vs. the Euro) and part of 2015. Foreign exchange interventions have been increasingly limited in order to preserve the level of reserves.
There are no official statistics on the incidence of poverty after 2010. Bank staff projections suggest that poverty incidence declined from 7.6 percent in 2013 to 7.1 percent in 2015 using the 2011 PPP US$ 3.1 poverty line. This decline reflects the capacity of the social protection system to protect consumption to some extent and the increasing control over inflation. On the negative side, serious production and turnover setbacks in mining, parts of agriculture production (cereals) and labor intensive services (tourism) should adversely affect living conditions in rural areas, where poverty is concentrated, as well as some urban poverty pockets where employment prospects are deteriorating. Tunisia’s political transition made steady progress in 2014, overcoming political deadlock to adopt a new constitution, and holding both parliamentary and presidential elections. The national dialogue platform, brokered by key civil society organizations, played a crucial role in building consensus among all major political parties. This resulted in the adoption of a consensual roadmap that paved the way for the general elections which took place peacefully at the end of 2014. The political transition concluded in 2015 with a new government beginning a five-year term and taking the lead in meeting Tunisia’s security and economic challenges.
After a short-lived rebound in 2012, the increasing political and social instability, as well as the difficult external environment, that characterized most of 2013-2014, had led to a slowdown of economic growth. Rebounding from the contraction of 1.9% of GDP in 2011, the economy grew by 3.6% in 2012, slowed down to 2.6% in 2013 and the Bank estimates that for 2014 growth will remain modest at 2.2%. Unemployment remains at 15.3% from 16.7% in 2011, but still well above the pre-revolution level of 13%.
Post-revolutionary governments have pursued expansionary fiscal and monetary policies until 2013 to support the economy and employment. The government had a deficit target of 5.1% of GDP in 2014 which will be missed as fiscal revenues were restrained by subdued growth, both domestically and in the country's main trading partners in Europe. For 2013, the deficit has reached 6% and should remain at that level in 2014. A tightening of monetary policies as well as more moderate commodity prices have allowed for a slowdown in consumer price inflation, which slowed down to 5.5% in February 2014, after reaching 6.3% one year earlier.
The external current account deficit remained large for most of 2013 and is estimated to have increased to 9.4% of GDP. The trade balance deficit widened from 10.3% of GDP in 2011 to 13.4% in 2012. The impact of the trade and income deficits on the current account will be partly offset by a surplus in services; the number of tourists visiting Tunisia is forecast to rise after the slump caused by the revolution in 2011, but growth continues to reflect weakness in European demand. Following a rebound in 2012, Foreign Direct Investment (FD) declined in 2013, in the context of persistent political uncertainty, and foreign exchange reserves have gradually declined until end 2013. Net FDI flows are therefore estimated to have declined to US$1.0 billion, compared to the US$1.7 billion reached in 2012. Some limited foreign exchange interventions continued in 2013, as pressures on the currency mounted. A persistently wide current account imbalance and lower than expected capital inflows have led to a reduction of reserves to about US$6.8 billion by end-2013 (or just equivalent to 3 months of imports of goods and services). Supported by only limited interventions of the Central Bank, the exchange rate has depreciated by about 11% vis-à-vis the Euro in 2013. In early 2014, both reserves and the currency recovered somewhat, on account of increased confidence after the resolution of the country’s political crisis.
Source: World Bank
Updated: September 2015