Ekonomiska bedömningar
Tunisia

Tunisia

Population 11.1 million
GDP 3922 US$
B
Country risk assessment
B
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Synthesis

MAJOR MACRO ECONOMIC INDICATORS

  2014 2015 2016(f) 2017(f)
GDP growth (%) 2.2 0.8 1.3 2.5
Inflation (yearly average) (%) 4.9 4.8 3.7 3.9
Budget balance (% GDP) -3.4 -4.4 -4.5 -3.6
Current account balance (% GDP) -9.1 -8.8 -8.0 -6.9
Public debt (% GDP) 51.6 55.7 59.0 58.9

 

(e) Estimate  (f) Forecast

STRENGTHS

  • Natural resources (gas, phosphates) and agricultural and tourism resources
  • Gradual political transition
  • Diversification of the economy underway and reasonably skilled labour force
  • Proximity to the European market and Association Agreement with the EU

WEAKNESSES

  • Strong social and geographic inequalities
  • High unemployment, mainly amoung young people
  • Economic importance of agriculture
  • Tourism sector facing political and security issues and greater competition

RISK ASSESSMENT

Towards a gradual recovery in growth

Growth was fairly soft in 2016.The recovery in services and manufacturing was tempered by the negative contribution of the energy and extractive sectors. Tourism was encouraging with a net improvement in added value in the hotel sector which recorded an increase in the number of overnight stays. In 2017, the economic upswing is expected to continue, although at a slower than expected pace because of weak performances in the key activity sectors, such as energy, which continue to be hampered by weak oil prices and the normal decline on the main oil fields. Negotiations between the government and the unions should limit the continuing social unrest in the phosphate-producing areas which curbed theproduction in 2016. Tourism activity will pick up slightly following an increase in tourists from Eastern Europe.  Finally, despite ongoing consolidation of the public finances, public investment is expected to sustain growth. Moreover, Tunisia 2020 Conference held in November 2016 enabled Tunisia to collect more than USD 15bn in pledges and promises of investment from the country's main international donors and partners.  These investments will allow the government to kick off the first phase of the five-year development plan 2016-2020 presented in May 2016, which is expected to include a raft of infrastructure projects such as the extension of road and railway networks. After slowing slightly, inflation will be more dynamic in 2017. The slight rise in oil prices as well as persistent downward pressure on the dinar will lead to higher imported inflation. Higher prices for administered products are moreover expected to favour increases in domestic prices.

 

Slight decline in the twin deficits in 2017

The public deficit deepened in 2016. The savings resulting from spending cuts embarked on after the reform of oil subsidies were reallocated to the fight against terrorism and the reinforcement of security policies. The loss in revenue resulting from a fall in oil production also limited the level of taxes collected in 2016.

In 2017, the implementation of structural tax reforms under the IMF programme and the austerity policies driven by Prime Minister Youssef Chahed is expected to bring down the public deficit. Of the reforms recommended by the IMF, the authorities are likely to continue with changes to the civil service aimed at bringing down the costs of paying civil servants as well as reforming the civil service pension system.  The freeze on public recruitment should limit the increase in current spending in the short term. Tax receipts are also expected to increase in 2017, thanks to better tax collection, which should facilitate tax remittances and combat tax evasion. Moreover, corporation tax will be increased. Despite this commitment to conducting a cautious fiscal policy, there are still considerable obstacles and the government is likely to continue to deal with the representatives of different trade unions and corporations so as to limit strikes and blockades in response to the austerity policy, as was the case in 2016 regarding the liberal professions and pharmacists.

The current account deficit will remain large in 2017 but will be significantly lower than in 2016. Exports are expected to increase moderately, enabling an improvement in the trade balance. A more marked slowdown in foreign demand could, however, dampen export momentum. The Tunisian dinar will continue to face downward pressure but it could firm up with the growth in FDIs.

 

The coalition government faces several challenges

After the Tunisian parliament ousted Prime Minister Habib Essida in a vote of no-confidence, the president named former minister for local affairs, Youssef Chahed, as prime minister. The challenges facing Youssef Chahed's government, with a cabinet of some thirty ministers, are many. The country continues to face many social and economic challenges, as well as popular expectations, which fuels strikes and protests. On top of this is the scale of the security threat in the territory, of which Tunisia became all too aware after the attacks which hit the country. Improving the business climate is still one of the government's main priorities, aimed at increasing the country's attractiveness for investors. To this end, the country implemented a new investment code in September 2016 to facilitate the placement of FDIs. 

 

Last update: January 2017

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