A new World Bank report, Global Economic Prospects (GEP) 2009, examines the impact of the financial crisis on GDP growth across the world, which has dimmed short-term prospects for developing countries
In Tunisia, says the Report, GDP eased to 5.1 percent growth in 2008, from 6.3 percent in 2007, largely because of deterioration in the external environment, in particular the economic slowdown in the EU. Remaining import tariffs on EU goods were dismantled in January within the framework of the EU-Tunisia Association Agreement, and steps have been taken in the financial sector to reduce unsound and nonperforming loans by improving credit risk appraisals. Over the first seven months of 2008, foreign direct investment (FDI) in industry increased 47.2 percent, widening from the earlier focus of FDI in tourism
The World Bank document discusses the economic outlook of Tunisia in terms of its membership in a regional group of diversified economies also including Jordan, Lebanon and Morocco which are heavily dependent on imported oil and refined petroleum products, as well as food and feed, including wheat and coarse grains. The terms of trade of these countries fell by 4.2% in 2008, boosting up the group’s deficit current account to 7.3% of GDP (for the first time since 1997 Asian crisis) against 3 6% in 2007 In the future, these economies will benefit from the decline of commodities prices until 2010, and their current account deficit should decline by 0.7 to 0% of GDP in 2009 and 2010 respectively.
Regarding the impact of the financial crisis, The World Bank report pointed out that “to date, the direct effects of the financial crisis experienced by most developing economies in the region have been relatively mild, as banks and investment companies in the Middle East and North Africa were not large holders of subprime mortgage-backed securities. But indirect effects are increasingly becoming evident, with spreads on sovereign debt increasing and equity markets witnessing sharp declines”