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Tunisia: Exports of manufacturing industries up, but higher trade deficit

The Executive Board of the Central Bank of Tunisia (BCT) held, on Tuesday, its regular meeting which was devoted to looking at the economic and financial situation, both at the national and international levels.

Up to March 2010, the international environment was marked by ongoing appearance of signs of recovery for the world economy. Yet, persistently high levels of public indebtedness and unemployment rate in several industrialized countries continue to exert pressure on the world growth prospects.

This situation led to volatility of foreign exchange markets, of raw materials prices and of the international stock exchange markets. In this context, the national economy has posted, as per available data, a recovery in the industrial activity over the first period of the year in the wake of better external demand.

In fact, exports of manufacturing industries, excluding agro-food, grew by 9.7% in the first two months of the current year, compared to 16.2% drop in the same period of last year. However, during the same period, imports increased significantly, involving mainly products directly tied to economic activity, in particular, raw materials and semi- finished products, capital goods and energy.

This led to higher trade deficit compared to 2009. At the monetary level, M3 money supply rose, over the first two months of 2010, by 2.2% compared to its level at end December 2009. Similarly, financing to the economy grew by 1.6%, compared to 0.4% a year before, showing thus the ongoing efforts by the banking sector with respect to financing of the economic activity. Excess liquidity was tightened slightly in current March.

Thus, intervention by the Central Bank of Tunisia to mop up this surplus was reduced, accounting for an average amount of 833 million dinars (MTD) over the first 20 days of March, compared to 1,035 MTD in February. Day-to-day interest rate on the money market fluctuated, over the same period, between 4.15% and 4.34% compared to an average 4.08% for the previous month. The dinar exchange rate posted, as of the beginning of the current year and up to 30 March, 6.4% depreciation against the US dollar and quasi-stagnation against the euro.

As for trend in prices, the general index was stabilised in February, notably in the wake of the sales season; while the inflation rate came at 5.2% over the first two months of the current year.

In considering these evolutions, the Executive Board decided to keep unchanged the key rate of the Central Bank, while continuing to mop up excess liquidity to further contain inflationary pressure in light of the last increase in the reserve requirement rate.

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