- The strong growth of Tunisia's economy is foreseen to keep on the rest of this year and in 2005. Analysts expect a real GDP growth rate in 2004 of 5.6 percent, the same level as last year. Tunisia remains the strongest economic performer of the North African region and the strongest cause of concern is the high unemployment rate in the country.
This was the conclusion of a mission by the International Monetary Fund (IMF), reviewing the economic performance of Tunisia. The IMF team found a strong economic growth in a country that slowly and in a controlled manner has introduced economic reforms and is set to go ahead opening up its economy.
- Over the past decade, Tunisia's economic performance has been one of the strongest in the region, reflecting gradual but continuous structural reforms, well-targeted social policies, and prudent macroeconomic policies, according to the IMF. Tunisia signed an Association Agreement with the EU in 1995, marking the beginning of a significant opening to trade with Europe. Further, fiscal and monetary discipline had contributed to macroeconomic stability.
The IMF team found that the strength of the Tunisian economy had continued in 2003 and "the short-term outlook is favourable." Favourable agriculture production and robust non-energy exports contributed to high growth and a narrowing of the external current account deficit in 2003. A rebound in tourism, a pickup in European demand, and continued real depreciation of the dinar is projected to sustain this strength in 2004. Monetary policy was remaining prudent and inflation under control.
- Despite Tunisia's favourable economic performance, its objective of approaching lower-tier OECD income levels has not been met, and unemployment remains high, the IMF however noted. Meeting this challenge would "require strengthening the macroeconomic policy framework and accelerating structural change," the Fund observed.
Regarding a macroeconomic policy framework, Tunis authorities are preparing to gradually open up the external capital account. To maintain a measure of monetary policy independence, the authorities have begun a gradual transition toward a floating exchange rate regime. Tunisian authorities are further implementing structural reforms supported by the World Bank, the African Development Bank and the EU.
The IMF leadership today commended the Tunisian government for its success in "maintaining the economy's resilience and strength, notwithstanding recent shocks and sluggish growth in Europe - Tunisia's main export market." They noted that Tunisian structural policies, in conjunction with well-targeted social policies, have put the country among the leaders in the region in terms of growth and market-oriented reforms.
The IMF directors in a statement noted that, while the economic outlook for 2005 remained favourable - underpinned by a rebound in tourism, agriculture, and exports - the main challenge for Tunisia was to "solidify conditions for strong, sustainable growth" and reduce unemployment.
They therefore encouraged the authorities to "take advantage of the current environment to accelerate reforms aimed at raising the economy's potential and creating a business environment conducive to private investment. Appropriate sequencing of these reforms while maintaining social cohesion will be key to the success of such efforts," the IMF leaders added.
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