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Tunisia: CenBank points to slowdown in economic activity

The Central Bank of Tunisia (BCT) pointed to “signs of slowdown of the economic activity, particularly a fall in the consumption of high and middle voltage electricity which reflects the

level of industrial activities,” and a decline in the rate of growth of exports in the first quarter of 2012 (9.1% increase compared with 10.3% for the first quarter of 2011).

This trend risks to persist given the contraction noted in exports of the mechanical and electrical industries sector (-11.9%) and textile, clothing, leather and footwear industries (29,6%), in connection with the fall in foreign demand, said the BCT in a report on the economic and financial situation set from January 1 to April 16, 2012.

Yet, some indicators continued their gradual improvement recorded since early this year, including tourism and imports of commodity equipment.

//Overall balance of payments: deficit of 377 MTD//

With regard to external payments, the BCT said the overall balance of payments showed a deficit of 377 million Tunisian dinars (MTD) in the first three months of 2012, i.e. a decrease of 57% compared to 2011.

“This contraction of the deficit is attributable to the improvement of the surplus of the balance of financial and capital transactions, following the 28.3% increase in FDI as well and the rise in the lending and borrowing balance of 42%.”

Yet, the deficit of current payments has widened significantly to reach 1,624 MTD, i.e. 2.3% of the GDP, compared with 1,5%, a year before, as a result of the widening of the trade deficit by 1,065 MTD (due to a 21.6% increase of imports in most of the sectors, except for food industries while exports grew by 9.1%).

The latter recorded a decline in March despite the noticeable increase in exports and derivatives, said the BCT.

The impact of the trade deficit was partially offset by the improvement of the surplus of the balance of services following the rise in tourist revenues by 32.8% to reach 524 MTD (-1.6%) compared to the same period of 2012) and remittances (+23.7%), reaching 673 MTD.

This situation was reflected in lower net assets in foreign currently which reached 9,947 MTD to April 16, or 101 days of imports against 113 days to end 2011.

//Average inflation rate remains at the level of 5.4%%//

With regard to inflation, the BCT said it remains at high levels, despite a 0.1% decline in the consumer price index in March 20121, compared to the month before.

On a year-on-year basis, the inflation rate fell by 5.4% in the end of March 2012, compared to 5.7% in the month of February of the same year.

The average inflation rate remained at the level recorded the month before, i.e. 5.4%

The inflation rate exclusive of food and energy reached 4.9% and was 4% exclusive of fresh food products.

//BCT injects daily 3,400 MTD on the money market//

The BCT said the situation of the banking sector was marked in the first quarter of 2012 by a fall of fixed-term deposits by 7.2% compared to 2011 and an increase in the rate of non-performing loans, thus widening the pressure on the sector’s ability to finance the economic activity.

Facing the high needs of banks in liquidity, the BCT continued its interventions on the money market by injecting a daily amount of 3,400 MTD since early March.

The average interest rate posted an increase, to reach 3.73% since early April compared with 3.48% in March and 3.42% in February.

// Issuances of the State reached 618 MTD //

With regard to the activities of the financial market, the BCT said “the State’s issuances continued in March and until April 6, 2012, bringing about an increase in the cumulative value of issuances since the beginning of this year to 618 MTD.

In terms of transactions made at the stock exchange, they recorded a sustained dynamic in March and until April 6, increasing their volume since early this year to 491 MTD.

The share of foreigners has reached 20.7% of the market capitalization.

As a result of these developments, the TUNINDEX continued its upward trend in March (+1.1% compared to late February), said the BCT.

This trend was reinforced by a faster growth in the first week of April (+4.5%), allowing to achieve a return of 6.6% since the beginning of this year.

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