April 13, 2011 / 6:42 PM / 8 years ago

Revolution aftermath to hit Tunisia growth -AfDB

* AfDB sees three scenarios for Tunisian economy

* Tunisia sees 2011 economic growth below 1 percent

By Marie-Louise Gumuchian

TUNIS, April 13 (Reuters) - Tunisia’s economy is seen growing 1.1 percent this year in one of three scenarios for the North African country following a revolt that toppled its president, the African Development Bank (AfDB) said.

But reflecting uncertainty about the country’s near-term prospects, the AfDB said the economy could contract by 2.5 percent in the case of prolonged instability, while its most optimistic scenario for 2011 forecasts 3.6 percent growth.

President Zine Al-Abidine Ben Ali was ousted by mass protests on Jan. 14 after 23 years of autocratic rule.

Interim authorities struggled to restore stability, but last month laid out a plan for a transition to democracy.

Tunisia expects little economic growth in 2011 and needs $4 billion in foreign loans to help it recover from the aftermath of the revolt, its finance minister has said. [ID:nLDE7301PA]

“In the three scenarios, the GDP (gross domestic product) growth will be affected by lower demand for tourism services, business disruption, and reduced FDI (foreign direct investment),” AfDB said in a March brief published this week.

Unlike neighbours Algeria and Libya, Tunisia does not sit atop vast oil and gas reserves and relies heavily on tourism.

It does, however, have a relatively diversified economy and economists say it has the potential to move further up the value chain with the right mix of policies and commitment to long-term investment. Unemployment is around 14 percent.

AfDB’s middle scenario suggests GDP growth of 1.1 percent in 2011 and 3.3 percent in 2012. “Private investment will contract, while current public expenditures, especially wages and salaries, will rise significantly because of the increasing social demands,” AfDB said.

The fiscal deficit is seen at 5.2 percent of GDP in 2011 while the current account deficit will rise to 7.6 percent of GDP because of an increase in imports and decrease in tourism receipts. Inflation could rise to at least 4.7 percent.

AfDB said interim authorities carried out “decisive actions” since January as they attacked the vestiges of Ben Ali’s rule.

Provided the course is pursued and leads to free and fair elections, “Tunisia’s economic growth potential is likely to gain significantly as the drag of predatory corruption is lifted and a socio-political environment more conducive to individual liberty and private economic enterprise takes hold”.

However AfDB said the real economy and fiscal balances would remain under pressure following the drop in economic activity.

“Moreover, the underlying social discontentment that drove the Tunisian revolution, notably youth unemployment ... and regional disenfranchisement remain,” it said. AfDB said in March it would lend Tunisia some $1 billion to aid its recovery.

Editing by Ruth Pitchford

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