Economic growth will continue to strengthen, driven by investment, which will benefit from the implementation of the laws on investment and start-ups, and by more competitive exports as a result of the real depreciation of the dinar. The increase in oil prices and the depreciation of the dinar will continue to push up inflation, but the impact will be offset by wage moderation. The economy continues to operate below its potential. The current account deficit is high but will decline slightly in the coming two years.
The central bank should raise interest rates, which remain negative in real terms. The government deficit is expected to continue to fall as a result of higher tax revenues and curbs on salaries of civil servants. Public debt, which is already high, will remain vulnerable to the depreciation of the dinar. Controls on public spending will have to be pursued, including through the implementation of the reforms to subsidies and social security funds, in order to bring public debt back to a sustainable path. Improving education by providing better teacher training and creating high-quality jobs remains essential.
Source: National Institute of Statistics.
1. A decline in the real effective exchange rate indicates an improvement in competitiveness.
Source: Central Bank of Tunisia.