Published January 9, 2012
Pain has been felt most keenly in the large tourism sector, which saw a 40% drop in revenues as holidaymakers shied away from perceived instability in Tunisia and Egypt. Other economic sectors have slowed in the absence of clarity on future government budgets and finance law.
Meanwhile, workers emboldened by the fall of Ben Ali’s police state have staged strikes, putting factories and companies temporarily out of commission. Growth in 2011 is predicted at 0%.
However, flatline – as opposed to negative growth – is good given the circumstances, says Emanuele Santi, the chief economist on Tunisia for the African Development Bank (ADB), which is headquartered in the Tunisian capital. This year’s uprising spared most infrastructure and the government has largely covered the costs of damages, Mr Santi said.
“The situation now is delicate, but far from being catastrophic,” says Moez Labidi, an economics professor at Mahdia University and an independent adviser to Tunisia’s central bank.
Crisis in the euro zone, Tunisia’s largest trading partner, could lower demand for Tunisian exports, albeit with the potential trade-off of increasing demand for low-cost Tunisian labour. “We haven’t had an exchange rate crisis and we’ve maintained a B- credit rating, which is investment grade,” Mr Labidi said. “But if growth remains anaemic, it poses a problem for 2012.”
Unemployment has risen, compounded by the return from war-wracked Libya of tens of thousands of Tunisian workers. Overall, Libya’s war dented Tunisia’s economy by -0.4% of GDP in 2011, according to the ADB.
Ultimately, Tunisia needs structural reforms to narrow wealth gaps, improve education and target government subsidies, economists say. But some short-term progress may also be possible.
Post-war Libya could provide Tunisia jobs as the country rebuilds, Santi says.” A pro-active labour migration policy with Libya could have huge payoffs.”
Meanwhile, Tunisia could benefit from restructuring its banking sector to improve entrepreneurs’ access to loans, says Labidi.
“We have many small banks that are very strict about granting credit,” he said. “Normally banks should be willing to take risks for their clients.”
Most fundamentally, leaders must reassure the public that economic reform is coming, economists say.
Meanwhile, almasryalyoum.com reports that Egyptian tourism plunged 32% in 2011.
The number of tourists who visited the country in 2011 was one-third less than in 2010, Egypt’s Tourism Minister Mounir Fakhry Abdel Nour says. There were about 10 million tourists in 2011, around 32% fewer than in 2010.The tourist sector brought in US$9 billion, 30% less than 2010.
He said the government estimates that about 13.5% of the national income comes from the tourism sector. He added that tourism is the primary source of foreign exchange and that about 4 million people work in the sector.
The Egyptian government says that the state of uncertainty that has prevailed following the January 25, 2011 revolution, as well as periodic outbreaks of violence over the past year, have discouraged tourists from visiting the country.