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Tunisia economy expected to shrink by 8% in 2020

November 5, 2020 at 11:36 pm

A man retrieves cash from an ATM in the capital Tunis, Tunisia on March 27, 2020 [FETHI BELAID/AFP via Getty Images]

Governor of the Central Bank of Tunisia Marwan Al-Abbasi anticipates a seven to eight per cent decline in gross domestic product (GDP) this year, after recording a two per cent contraction in the first quarter of 2020 and 20 per cent during the second quarter.

This came during a parliamentary session on Thursday on the economic situation and the policies and role of the Central Bank during the coronavirus crisis.

Al-Abbasi attributed the downturn of the local economy to the coronavirus crisis, adding that: “The economic situation was difficult before the pandemic, and worsened by the repercussions of COVID-19.”

Small and medium enterprises were the most affected by the pandemic and face a difficult situation, according to the Central Bank governor, who confirmed: “The coronavirus also had a negative impact on the tourism sector and exacerbated unemployment rates.”

According to estimates by the Central Bank of Tunisia, the tourism sector shrank by 60 per cent this year, while unemployment rates exceeded 18 per cent compared to 15.5 per cent in 2019.

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Al-Abbasi indicated: “The gross domestic product has dropped to unprecedented rates in the history of Tunisia in 62 years, with a six per cent decrease in savings, along with a decline of foreign direct investment.”

He expects the proportion of the investment’s contribution to GDP to decline to 13 per cent by the end of 2020, compared to 26 per cent in past years.

The Central Bank of Tunisia predicts inflation to slow down to an average of 5.4 per cent during 2020, compared to 6.7 per cent in 2019.

Al-Abbasi remarked: “By the end of this year, we will record a 5.7 per cent inflation rate, which is a positive number.”

Data from the Tunisian National Institute of Statistics showed on Thursday that the inflation rate had remained stable for the third consecutive month at 5.4 per cent.

The inflation rate has decreased from seven per cent during 2018 and then 6.7 per cent in 2019, amid fluctuations in the exchange rate of the Tunisian dinar at the time.

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