According to recent figures released by the Tunisian government, in spite of the global slowdown and the resulting recession in its biggest export markets, the republic’s economy closed 2009 with a healthy set of macroeconomic fundamentals, due in part to increased foreign direct investment (FDI) and international financing, as well as an ongoing privatisation and diversification strategy, said Oxford Business Group Report.
Although 2009 was a difficult year, especially considering the country’s close economic relationship with a recession-hit EU markets, who make up the bulk of demand for both Tunisia’s goods and services, the economy was still able to grow an impressive 3.1%, while several European economies suffered from 0% growth in 2009. For 2010 the government expects economic growth to reach 4%.
&In terms of FDI, the country attracted TD2.38bn (€1.26bn), according to figures by the Ministry of Development and International Cooperation. The government expects Tunisia’s economy to receive a total of TD100bn (€52.91bn) in public, private and foreign investment during the next five years, local media reported.
Tunisia’s solid performance has also been a result of the government’s ongoing economic upgrade programme, set up in 1995 to improve business productivity and performance. Through credit lines and direct technical support, the state assistance has allowed an investment of TD5.2bn (€2.7bn) to assist 4500 companies. This has led to more professional management techniques, which impact the whole economy, and it meant a large number of companies were prepared for the slower economic growth, due to increased competitiveness of 2009.
“When you have qualified human resources around you, you make better decisions, you delegate and the company’s governance is improved. This has been a big improvement in the country’s economic fabric,” Chekib Nouira, chairman of the Institut Arabe des Chefs d’Enterprises, told OBG.
The country is also looking at ways to increase economic cooperation with other markets outside of the EU, such as sub-Saharan Africa, the Gulf and Asia, which would most likely further the country’s resilience to future economic shocks. However, as other emerging markets begin to muscle in on the Eurozone, Tunisian firms are also looking to increase their level of added value and shift away from cost competition.
“Tunisia’s most competitive companies are already at full capacity, so it means they need to focus their attention and energy on the markets they are already serving,” said Nouira. “The strategy now for the country’s industries is to move up the value chain and not rely solely on cost competitiveness, which won’t last forever.”
The country’s privatisation programme will also attract more investment into the economy. In 2010 it will affect several sectors, helping to diversify growth. Companies in the agricultural sector, services, transport and industry are scheduled to be privatised this year. State players like the Société Tunisienne de Réassurance, Compagnie Tunisienne de Navigation and Société Tunisienne d’Aviculture are expected to attract attention from investors much as the recent initial public offering of Cements de Bizerte did.
The country was also able to reduce its inflation rate from 5% in 2008 to 3.7% in 2009, according to figures from the central bank. However, keeping consumer prices stable might prove challenging in the context of efforts to rein in inflation. The government has already announced a 5% increase in fuel prices to help trim the budget deficit. The expected pick-up in the world economy might put even further upward pressure on prices, affecting 2010 real growth figures.
Investment in 2010 will also be influenced by a €206m loan from the World Bank. The deal, recently agreed between a delegation of the international institution and the Ministry of Development and International Cooperation, will focus on enhancing the employability of university graduates, developing renewable energies, improving natural resource management and upgrading social services, local media reported.
Although the country has shown it is prepared to take advantage of renewed economic confidence, Tunisia economic performance in 2010 will remain dependant on a recovery from the European economies.
Source: Oxford Business Group