Macro Forum: The Street View



The economy is expected to grow 2.6% in 2018 on the back of stronger inflows from tourism and an uptick in agricultural output. The tourism sector say its strongest activity in nearly ten years with arrivals by tourists reaching 8.3m in 2018 up from 5.6m in 2017. However, headwinds to growth include high unemployment and labour unrest. GDP growth is forecast at 2.7% in 2019.

Inflation increased marginally on a year-on-year basis to 7.5% in December from 7.4% in November 2018 with the outlook improving due to the decline in the global oil price. Price pressures are, however, a risk as the 2019 budget includes significant increases in public employee wages. Inflation is forecast at 7.5% in 2018 and is expected to decline to 6.8% on 2019. The Central Bank of Tunisia maintained the key policy rate at 6.75% after a cumulative 175bps increase already experienced in 2018 due to the dramatic weakening of the TND and high inflation. The 2019 budget has put the fiscal deficit at 3.9% of GDP, lower than the 4.9% of GDP in 2018. Foreign reserves rose between September and October 2018 due to external financial support from an IMF disbursement of US$247m and US$500m from the World Bank. However, reserves declined by US$365.5m again in November to US$4.8bn, representing 2.3 months of import cover. Despite an increase in FDI and tourism inflows, headwinds include reduced phosphate production, weak inflows from remittances and high import bill. Although the lower global oil price has eased pressure on external balances, structural deficiencies continue to hamper government’s attempts to make reforms, which will turn the situation.

The TND depreciated 7.1% from TND2.8 at the start of the quarter to end on TND3 to the US$.

In November 2018, Prime Minister Youssef Chahed reshuffled his cabinet making 18 changes out of 34 altogether with the only major portfolio impacted being Justice. Prime Minister Chahed included a few Nidaa ministers, but the majority were from Ennahdha given the importance of the National Coalition and keeping all on side as protection against a vote of no confidence and ensuring his support is kept in Parliament.


Real GDP Growth

Source: International Monetary Fund

Tunisia FX vs FV

Source: Bloomberg Spot Prices and Actis methodology for Fundamental Value


Source: International Monetary Fund


Sherif Elkholy

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Beji Caid Essebsi
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2019 TBD