Growth in Tunisia is expected to remain modest at 1.2% in 2024 and 1.8% in 2025, underpinned by lower inflation, a narrowing current account deficit and continued reform efforts, the European Bank for Reconstruction and Development (EBRD) said in its latest Regional Economic Prospects report published on Thursday.
Contraction in agriculture and mining has been offset by expansion in tourism, financial services and some industrial sectors.
The bank said Tunisia faces significant downside risks, including limited fiscal space, high external debt and the economy’s vulnerability to external and climatic shocks.
Growth is underpinned by a recovery in exports of olive oil, mechanical and electrical products, and an increase in domestic demand against a backdrop of declining inflation, which fell to 7.0% in July 2024, its lowest level in 30 months.
As a reminder, on September 16, Fitch Ratings raised Tunisia’s long-term foreign currency issuer default rating (IDR) from ‘CCC-‘ to ‘CCC+’.
The rating agency said the upgrade reflected its increased confidence in the government’s ability to meet its substantial budgetary financing needs, thanks to Tunisia’s stronger external position, which allows it to maintain international reserves at levels sufficient to meet current external payments and debt obligations.
Last March, Moody’s also upgraded Tunisia’s outlook to stable from negative based on the country’s continued access to some bilateral and multilateral external financing, despite slow progress under an IMF-supported program.
The Southern and Eastern Mediterranean (SEMED) region is forecast to grow by 2.1% in the first half of 2024.
This is slightly lower than in the same period last year (2.7%). However, growth is expected to accelerate to 2.8% in 2024 and 3.9% in 2025, according to the EBRD.
