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Tunisia: Fallout from the world financial crisis on Tunisia’s economy was limited to only certain export sectors and services

 Presenting   to the President of the Republic the 51st annual report of the Central Bank of Tunisia, which analyses the main economic and financial developments in 2009 on both the international and national scenes, the BCT governor pointed out that, domestically, despite recession in the economies of European Union countries, fallout from the world financial crisis on Tunisia’s economy was limited to only certain export sectors and services, while the banking and financial sector pursued growth at a steady pace, maintaining for the most part good performance.
Actually, the resilience of Tunisia’s economy over the past two decades and ongoing implementation of structural reforms (notably keeping indebtedness down and improving financial soundness at the banking sector) allowed room for action to limit the effects of the crisis by timely implementation of appropriate measures to boost the economy and help companies overcome its impact. Thus, the results of these efforts were satisfactory, especially in terms of growth and maintaining financial balances, both domestic and external.
In this particularly difficult situation and despite the recession that has shaken the world, the Tunisian economy has managed to achieve satisfactory results in the pursuit of growth and maintenance of financial balances, despite falling external demand from Tunisia’s main partners, notably those in the Euro Zone, which has brought about a drop in activity for certain export-oriented sectors such as manufacturing industries, tourism, air and maritime transport, and foreign investment.
There was 3.1% economic growth in 2009, thanks to a good agricultural season and strong domestic demand (particularly private consumption and public investment), while the contribution of external demand to growth was negative, due to 6.9% and 8.2% drops in export and import of goods and services respectively, compared to 2008 figures.
As for investment, gross fixed capital formation (GFCF) grew by 8.1% in current prices in 2009 to some 14,052 MTD, corresponding to an investment rate of 23.9% of GDP compared to 23.5% a year earlier. The faster pace of public investment helped offset slower growth in private investment, whose share in GFCF dropped from 61.5% in 2008 to 57.4% in 2009.
National savings rose by 5.8% in 2009 to 12,941 MTD, which helped cover 89% of the amount required to finance investment, up from 85% a year earlier. Foreign direct investment (FDI) fell by 33% in 2009 to 2,279 MTD.
This drop involved energy, real estate and tourism, while investment in manufacturing industries and communications continued to go up.
Net job creation was affected by the prevailing difficulties encountered by export companies, in the wake of falling external demand. 57,000 new jobs were created in 2009 vs. 70,000 the year before, leading to an increase in the unemployment rate to 13.3% vs. 12.4% in 2008. Measures taken starting the end of 2008 to boost the economy helped to maintain many endangered jobs and to avoid an even higher increase in the unemployment rate.
As for public finance, income was affected by the impact of slower economic growth and the drop in exports, while State budget expenditure rose, notably because of higher investment in the fields of basic infrastructure and community facilities, as well as in support to private investment to foster economic recovery. Thus the budget deficit came to 3% of GDP in 2009 and the rate of public debt fell from 43.3% of GDP in 2008 to 42.9% in 2009.
In the area of external payments, the current deficit dropped to 2.8% of GDP, while the general balance of payments, given the level of net capital inflows, yielded a surplus of 2,204 MTD, bringing the level of net assets in foreign currency at end 2009 to 13,353 MTD or the equivalent of 186 days of imports. This compares to 11,656 MTD and 139 days at the end of 2008.
As for price trends, the inflation rate went down to 3.7% in 2009, compared to 5% the year before, thanks to adoption of pertinent monetary policy and slower growth in price hikes for food products and energy, in line with lower world prices and ongoing price subsidies for basic consumer goods and oil products.
Overall, while these results represent significant performance in a context of difficult conditions around the world in 2009, persistent volatility on financial markets and uncertainty about prospects for the world economy require ever greater vigilance and efforts to safeguard the stability of financial balances and re-establish a growth rate that is high enough to provide a greater number of jobs.
This requires in particular greater efforts to enhance economic competitiveness, by boosting productivity to higher levels and by increasing the pace of exports, through development of promising innovative sectors with high technological content that can secure new foreign markets. In this regard, it will be necessary to speed up the creation of programmed technological and development poles and to strengthen technological infrastructure to attract more foreign investment, especially in the outlying regions of the country. Similarly, it is important to pursue the setting up of investment conferences, especially those specialized in promising innovative sectors, with the participation of all parties, i.e. support structures, financing institutions, and technological poles


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