Chapter 1 INTRODUCTION
Since the recent political changes (following the fall of former regime on 14 January 2011) the country is facing socio-economic turbulence and related challenges. Key economic sectors have been affected. In the short run, tourism and manufacturing industry (in particular offshore companies) as well as foreign direct investment (FDI) are expected to decline and this will have negative spillovers on the rest of the economy, including on the financial sector. The economic slowdown is expected to have a negative impact over economic growth, government revenues and employment. In addition, and while facing budget pressure, the interim government is confronting growing social expectations, such as youth employment and reduction of regional disparities (the ‘revolution dividend’).
The Libyan crisis constitutes an additional shock. Libya is an important trading partner and significant share of Tunisia industrial production is geared towards the Libyan market; this is particularly true for agro-processing industry (dairy products, pasta and tomatoes paste) and building materials companies (cement). A significant inflow of consumer goods imported from Libya through informal trade and sold in Tunisian markets at cheap price is also being affected.
In addition the return of more than 36,000 Tunisian migrant workers from Libya is adding pressure on the already strained economic situation. Remittances from Tunisian migrants in Libya are expected to be reduced. According to non official data, the impact of the Libya crisis on the Tunisian economy represents a net monthly loss of US$ 300-350 million. According to the World Bank, despite these short-term challenges, Tunisia’s economic outlook remains positive. The AfDB reports “Tunisia has gross foreign exchange reserves equal to five months of imports, moderate external debt representing 46 per cent of its GDP and the country enjoys the confidence of international markets and financial institutions”.