See also:
» 24.03.2011 - How cyber-activism lent savvy to North African protests
» 27.02.2011 - 84-year-old is new PM in Tunisia
» 27.02.2011 - Tunisia PM Ghannouchi resigns
» 26.02.2011 - Tunisia police attacks large protest march
» 23.02.2011 - Exodus from Libya; foreigners targeted
» 05.02.2011 - Tunisia govt improves rights situation
» 01.02.2011 - Tunisia freedoms still not secured
» 31.01.2011 - EU freezes Tunisia dictator's assets

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Politics | Economy - Development

Tunisia revolution to set back economy

Tunisian protester thanking for the revolution

© Cyberien/Flickr/afrol News
afrol News, 28 January
- The massive unrest in Tunisia is already having a strong impact on the economy and growth forecasts for this year have been downscaled. If the situation stabilises soon, a new democratic Tunisia could however see a remarkable recover.

The International Monetary Fund (IMF), before the Tunisian revolt, foresaw a further steady growth in the North African country in 2011. The latest IMF forecast for Tunisia foresaw a GDP growth rate of 4.8 percent this year. The UN World Travel Organisation (UNTWO) registered a 6 percent growth in arrivals to North Africa in 2010 and expected the 2011 growth to be at least as massive.

Then came the Tunisian popular uprising, ousting the country's long-time dictator whose only positive contribution had been to assure political and economic stability.

The first economic sector to react negatively was the tourism industry. While the tourism sector only contributes with around 7 percent of the country's GDP, it is among the largest employers in the country. Tunisia's tourism sector is estimated to provide some 350,000 jobs, representing 12 percent of the country's entire workforce.

With the ongoing unrest, almost all tourists have been evacuated from Tunisia and most booked flights have been cancelled or put on ice for the rest of the (northern) winter season. January however is low season in Tunisia, and the important summer high season could still be saved if stability comes quickly.

The second reaction came from abroad. Several rating firms were quick to react. Moody and Standard & Poor's downgraded Tunisia's credit rating already last week, while Fitch put Tunisia "on watch". This means that credits on the international market become more expansive for the new Tunisian government.

Also foreign investors, according to a report rele

Construction works in Tunisia

© World Bank/afrol News
ased by Fitch yesterday, are now putting their investments on hold. Foreign direct investments in Tunisia could fall by up to a third this year, Fitch Rating now predicts.

All in all, the rating firm therefore foresees a large impact on economic growth in Tunisia. It has downscaled its GDP growth forecast for Tunisia from 5 to 2 percent this year. The IMF and the current Tunisian government even believe the unrest could cost Tunisia up to 4.5 percent of its GDP. With an annual population growth of over 1 percent, an expected growth rate of 0.5 to 2 percent comes close to a recession.

But the new negative forecasts for Tunisia's economy during 2011 are very unsure, as also the Fitch report admits. If Tunisia fails to find a stable government during the year - or even worse, if the violence returns and becomes chronic - the outlook would be far too optimistic.

But if the democratic revolution succeeds in establishing a popular and progressive government within short, Tunisia could soon move from recession to boom.

A stable, democratic - although non-Islamic - government in the Arab world be a first-comer, attracting investors, tourists and donors in large volumes. Tunisia's integration into the neighbouring European common market could quickly deepen and a truly democratic government in Tunis could count on massive European assistance.

The course of the Tunisian economy has not yet been set. A deep crisis or a quick recovery depends on the credibility of the government establishing itself in Tunis over the next few weeks and months.

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