• Tunisia enters recession after GDP contracts 0.2 per cent and 0.7 per cent in first two quarters
  • Tourism receipts fall 59.6 per cent due to terrorist attacks
  • Industrial sectors continue to contract

Tunisia has officially entered a recession, after GDP fell 0.7 per cent in the second quarter of 2015, according to figures from the Central Bank of Tunisia.

GDP also fell 0.2 per cent in the first quarter.

The governor of the central bank, Chedli Ayari, blamed the slowdown on a number of factors, including a fall in investment, exports and output from its non-manufactruing sectors. Speaking to local radio station Express FM, he also said there had been a sharp fall in income from tourism, due to the weakened security situation following the recent attacks on tourists.

Both tourism and industry were affected by the 2011 revolution, and have struggled to recover despite steady GDP growth between 2012 and 2014.

But two terrorist attacks targeting tourists, at the Bardo Museum in Tunis in March and at Sousse beach in June, have caused tourism numbers to plummet.

As safety fears rose, tourism nights for July 2015 were down 76.6 per cent on July 2013, while tourist spending fell by 59.6 per cent.

British tourism was the most affected, with 93.1 per cent fewer tourists arriving, while Italian tourists fell by 79.6 per cent. A 26.3 per cent rise in the number of tourists from other Maghreb countries did not compensate for the other falls.

The industrial production index fell by 1.4 per cent over the first half of the year, following a 1 per cent fall in the first six months of 2014. Non-manufacturing industries contracted by 5.6 per cent in the first half. However, foreign direct investment inflows increased by 20.9 per cent to TD1.1bn ($580m) in the first seven months. Energy and manufacturing were the sectors which benefitted most.

Tunisia’s current account deficit fell slightly to 5 per cent of GDP by the end of July according to the central bank, and 8.5 per cent according to the Washington-based IMF.

The trade balance also improved by 9.7 per cent in the first seven months of 2015 thanks to an excellent olive oil harvest. The trade deficit is now at TD6.9bn.

External public debt also fell slightly to TD3.1bn over the same period, according to central bank figures, slightly ahead of IMF estimates.

However, the news of recession will make it less likely Tunisia can reduce its unemployment rate of over 15 per cent. Any recovery is likely to be very gradual.

“Growth is projected to slow to 1 per cent for 2015 as the repercussions of the tragic Bardo and Sousse attacks and persistent social tensions – as shown by work stoppages and strikes – dampened the benefits from the post-transition confidence boost, lower global oil prices and the eurozone recovery,” reads an IMF staff mission report from 26 August.

According to the IMF, reforms to banking and investment laws are vital. It is waiting for these measures to be taken before releasing the final tranches of Tunisia’s $1.68bn stand-by agreement. About $1.15bn has been extended so far, and the IMF plans to hand over another $303m on completing its review.

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