Tunisia’s growth is expected to slow to 1.5% for 2019 as a whole and pick up to 2.9% in 2020, said the latest Regional Economic Prospects Report by the European Bank for Reconstruction and Development (EBRD).
The EBRD explains the slowing of growth to 1.5% by “a delay in the implementation of structural reforms, notably due to uncertainty in the run-up to the presidential and parliamentary elections in September and October 2019, respectively.”
The same report said the country’s economy grew at a slower pace in the first half of 2019, achieving 1.2 per cent growth year on year.
The slowdown was driven mainly by the fall in manufacturing industries and the decline in extraction industries, despite the expansion in commercial services – mainly in tourism, communication and financial services – and agriculture.
“While remaining high, Inflation has slowed in September 2019 at 6.7 per cent, compared with a peak of 7.7 per cent in June 2018. Food and tobacco prices remain the main drivers of inflation, while the appreciation of the Tunisian dinar and monetary tightening by the Central Bank of Tunisia helped keep inflationary pressures in check.”
In 2020, the EBRD expects “a recovery in foreign investors’ confidence and in the reform momentum in Tunisia once the elections are over. This will result in significant improvements in both domestic and foreign investment, pushing growth to 2.6 per cent.”
The EBRD also pointed to “a possible increase in productivity and growth following the restoration of confidence following the successful democratic transition.”
It, however, warns against “risks stemming from the possibility that socio-economic protests would disrupt production and slow progress on reforms, given the new political structure and falling growth in Europe.”