TUNIS: Tunisia’s economy is set to enjoy a prolonged period of growth, according to a recent report from the International Monetary Fund and a joint study by the African Development Bank and the Organization for Economic Cooperation and Development.
However, both evaluations emphasized the necessity of keeping the current account deficit under control while maintaining the pace of reforms to enable the country to minimize any potential weaknesses.
In its latest statement on the economy, concluded in mid-June as part of regular Article IV consultations with Tunisia, the IMF stated that GDP could expand by almost 4 percent this year, up from the 3.1 percent posted in 2009.
Statistics from the end of May showed that inflation had increased from 3.7 percent to 5 percent year-on-year and the government’s fiscal deficit had widened to 3 percent of GDP as a result of higher spending stemming from economic stimulation efforts, but while the rise in these figures is somewhat worrying, the IMF said the state’s monetary policy stance was appropriate under the circumstances.
More significantly, the IMF said the Tunisian financial sector had not been affected by the global financial crisis.
The report stated that credit levels had remained steady and that the Bourse de Tunis continues to record exceptional growth.
Though there had been a decline in international reserves in spite of a rise in foreign direct investment (FDI) relative to the same period in 2009, Tunisia’s foreign currency holdings as of the end of May stood at $9 billion – a "comfortable" level, according to the IMF.
The statement did warn that though the global economy was gaining momentum, this recovery was uneven, adding that EU member states were expected to recover more gradually and could be subject to downside risks.
"In this context, Tunisia’s macroeconomic policies must adapt to trends unfolding in an uncertain international environment if they are to support Tunisian growth as effectively as possible," the IMF said.
According to statements by Joel Toujas-Bernaté, the head of the IMF’s mission to Tunis, the Tunisian economy should continue to expand by 3.8 percent, despite ongoing uncertainty in the international arena, and within the eurozone, Tunisia’s main trading partner.
Tunisia’s macroeconomic performance in 2009 was creditable, Toujas-Bernaté said, and the country was likely to enjoy a burst of growth over the next few years.
Due to structural reforms – including strengthening the financial sector and modernizing monetary policy – enacted over the past few years, the future looks promising for Tunisia’s push to develop an innovation-driven economy and emerging high-value-added sectors, he said.
Many of the IMF’s assessments were supported by a study jointly prepared by the African Development Bank (AfDB) and the Organization for Economic Cooperation and Development (OECD), the findings of which were released in mid-June.
The report said the Tunisian economy’s broader base and greater resilience had helped it ride out the worst of the global financial crisis.
"Tunisia has contained fallout of the global economic crisis thanks to its diversified and open economy and confirmed, one more time, its ability to resist external shocks," the report said.
While the report credited at least some of the solid performance of the Tunisian economy last year to external factors – the 6 percent improvement in agriculture yields was attributed to a good rainy season, for example – many of the other key sectors recorded growth rates close to or above that of agriculture.
Among these, the information and communication technologies sector and the hydrocarbons industry, which expanded by 16 percent and 13 percent, respectively, were the top performers.
Both the IMF statement and the joint AfDB/OECD report raised the issue of Tunisia’s current account deficit, with the IMF saying there had been a widening of the gap in the early months of 2010, a result of higher levels of imports outpacing exports.
Remittances from Tunisians abroad and tourism revenues had also stagnated.
While the government would like to see the current account deficit reined in, it can also see some positive effects of the recent surge in overseas spending.
Much of the rise in imports stemmed from investment in equipment and raw materials that will help boost economic growth, Ridha Ben Mosbah, Tunisia’s minister of trade and handicrafts, said at the end of May.
"The significant volume of imports augurs a continuous growth of the rate of exports in the future, a recovery of investment and the capacity of resilience of the national economy to external shocks," he said when releasing foreign trade figures for the first four months of the year.
Tunisia still must work to strengthen its economy and develop further insulation against future external shocks, but the foundations for sustainable growth have been laid.
