34.9 C
Tunisia
Thursday 23 September 2021
HomeFeatured NewsLibyan crisis deepens vulnerability of Tunisian economy - AfDB

Libyan crisis deepens vulnerability of Tunisian economy – AfDB

The Libyan crisis is deepening the vulnerability of Tunisia’s economy which has also been suffering to draw itself out from its own crisis, according to experts from the African Development Bank (AfDB).

In a quarterly analytical newsletter for the north African region, published early August by AfDB, these economists forecast a 0.4% drop in the growth rate of the GDP, to stand at 0.7% for the whole year of 2011, which has led the Bank to revise its previous estimate of 1.1%. Falling private investments in Tunisia could bring down GDP growth by 0.2% and exports by 0.3%.

This, however, would partly be softened by a rising consumption, of about 0.1%, related to the increasing demand of Libyan refugees in Tunisia, who have substantial financial means.

This AfDB bulletin looks into the short-range effects of the Libyan conflict on the Tunisian economy. It appears from this analysis that several sectors have been seriously affected, more particularly, tourism, the manufacturing industries—mainly the exporting enterprises.

Foreign direct investments have recorded a drop, which impacted negatively the budget revenues and increased the unemployment rate.

Furthermore, Tunisia would have to face to a new challenge and look for alternative sources in order to meet its needs in oil products which it used to import from Libya.

Discussions are underway with Algeria in order to substitute the Algerian imports for Libyan imports, on the same conditions.

On the social level, the Libyan conflict also had a direct impact on a particular segment of the population, precisely, those Tunisians living near the borders, dependent on revenues generated by informal trade with Libya, as well as households affected by the loss remittances of Tunisian guest workers in Libya.

Bilateral Trade:

Trade exchanges between Tunisia and Libya have significantly fallen during the first term of 2011. Tunisian exports to Libya went down by 34%, while imports recorded an unseen-before drop of -95%. This decrease resulted from Tunisia’s importation of oil from Libya.

AfDB’s assessment of the repercussions of the Libyan crisis on Tunisian exports highlighted two scenarios: one optimistic and another pessimistic. The former assumes a continuous decrease of exports towards Libya, at the same pace as the one recorded during this year’s first term. According to the latter scenario, exports would stop altogether.

Given the fact that value of the exports to Libya stood at 1,050 million dinars (MTD) in 2010, AfDB estimates, on the basis of simulations, that losses, depending on which scenario one chooses, would vary from 357 MTD and 886 MTD, in 2011.

Tourism and other services:

The Libyan conflict will impact negatively tourism, particularly health tourism, and, consequently employment.

According to some estimates, the total spending of Libyans in Tunisia stood at 890 MTD in 2010, which represented about 18% of Tunisia’s annual tourist earnings.

Up to late April, this year, 260,000 Libyans entered Tunisia, i.e., 14% of the total number of those who had visited the country in 2010. Hence, in the assumption of a total interruption of Libyan influx, the country’s losses would be of 750 MTD, i.e., the equivalent 86% of Libyans’ spending in that sector in 2010.

Immigration and remittances:

Home return of emigrants from Libya would obviously impact on the volume of remittances Tunisian expatriates send to the country (50 MTD, in 2009). According to the International Organization for Migration (IOM), 41,322 Tunisian workers returned home from Libya since February, out of the total Tunisian guest laborers in Libya of 92,000.

Rise of Libyan banks’ transfers to Tunisia:

The security situation in Libya pushed upwards the transfers made by Libyan financial institutions towards Tunisia, mainly during the last three months. Indeed, these direct transfers, as well as cash transfers (180 million Euros) have risen by more than 20% and 200%, respectively, compared to the same period of last year.

In light of these indicators, AfDB estimates that impact of the Libyan crisis on the banking operations is positive.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

MOST POPULAR

HOT NEWS