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Tunisian Current account deficit falls to 1.7% of GDP at end Q1 2020

The current account deficit narrowed to 1.7% of GDP at the end of the first quarter of 2020, compared with 2.2% a year earlier. This is due to a significant drop in foreign trade in relation, notably, to the disruption of supply chains in March 2020, according to a note from the Central Bank of Tunisia (BCT) on “Economic and Monetary Developments/April 2020” published on Tuesday.

The international health crisis resulting from the Coronavirus and the restrictions to limit its spread undertaken in March 2020 have strongly weighed on Tunisia’s foreign trade.

Export and import flow, in value terms, fell by 30% and 27% in March 2020, respectively, against increases of 16% and 13% a year earlier.

Despite this, the trade deficit –Free on Board (FOB)-Cost of insurance and freight (CIF)– decreased to 3.506 MD over the whole 1st quarter 2020, after 3.973 MD one year earlier.

Excluding energy, the trade deficit also dropped to 1.748 MD, down 814 MD compared to the 1st quarter of 2019.

Paradoxically, the widening of the energy balance deficit widened to 1.758 MD at the end of March 2020, i.e. more than half of the overall trade deficit, against 1.412 MD or 36.5%, one year earlier.

On another level, the monthly flow of tourism receipts (expressed in euros) fell by almost -30%, in March 2020, to 65 million euros, compared to 93 million a year earlier.

Over the whole of the 1st quarter of 2020, tourism receipts totalled €297 million (or 930.7 MD), the highest level ever reached over the last decade.

For their part, labour income (in cash), expressed in euros, recorded a slight increase of 0.4% (YoY) in March 2020 and a fall of -15% compared to the previous month.

Over the first quarter of 2020 as a whole, earned revenues rose by 16.5% to €355 million, compared with €305 million a year earlier.

The fall of the trade deficit (FOB-FOB) in the first quarter of 2020 (2.734 MD against 3.103 MD in Q1-2019) and the consolidation of the surplus balance of services, coupled with the improvement of factor incomes and current transfers, contributed positively to the attenuation of the current account deficit which narrowed to -1.935 MD (or -1.7% of GDP), at the end of the first quarter of 2020, after -2.513 MD (or -2.2% of GDP) one year earlier.

Excluding energy, the current account balance improved markedly as its deficit was limited to -0.2% of GDP in the first quarter of 2020, compared to -1% a year earlier.

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