Today the Podcast Podcast Economy

Elections in Tunisia: the economic challenge.

Seven million Tunisians are being called to the polls on Sunday (September 15th) to elect a new president from 26 candidates. An election to be held in November, which was anticipated due to the death of Beji Caid Essebsi in July. Security issues are on the menu of the election campaign, another issue: the economy.

The sources of concern are not lacking. Of course, growth has increased a bit. After years of slowdown that saw it stall at less than 1.2% increase in GDP in 2015, gross domestic product has grown faster in recent years with a rise of 2.5% in 2018, thanks in part to part of a recovery of tourism.

But since this summer, the IMF is more pessimistic and aims for growth around 2% this year due in particular to the disappointing performance of the industry in recent months.

In addition, Tunisia's economic performance could suffer from an economic slowdown in Europe. France, Italy, Germany and Spain are its four biggest customers. That said, the country is working to expand its markets and has joined Comesa, the Common Market for Eastern and Southern Africa. In the eyes of the OECD, the Organization for Economic Co-operation and Development, this should strengthen agri-food and service exports like health.

High unemployment among young people, even graduates

In any case, growth is not enough. Unemployment is still very high. According to data from the World Bank, it has fallen back somewhat after the peak of 2011, but 15% of the workforce is still looking for a job. A rate that masks significant disparities. It stands at 35% among young people, according to the IMF. Finding a job is not much easier for young graduates: almost 30% are looking for work. Another finding of strong gender inequalities: one in four women is unemployed. Regional contrasts are still felt.

And not only is it difficult to find a job, but the cost of living increases. Inflation over one year rose again in August (+ 6.7% according to the National Institute of Statistics). For the full year of 2019, the forecast is 6.9% before slowing a little next year. The price of food products is not spared. It is becoming more and more expensive to buy fruits and vegetables. In August, vegetables were 12% more expensive than at the same time last year.

These last two aspects, unemployment and inflation, represent major challenges for the future leaders of the country. Unemployment and expensive living had made the bed of the 2010-2011 revolt.

" An unwavering discipline "

This is a burden for household finances, and the finances of the state are not without challenges. Public debt has exploded. From 40% of GDP in 2010, it rose to 70%. In addition, Tunis recorded a budget deficit of nearly 5% of gross domestic product last year, a deficit that should be more contained this year if the objectives are met. For this, the International Monetary Fund believes that the authorities " an unshakeable discipline ". IMF following Tunisia closely. Tunis benefited in 2016 from a new aid plan of 2.4 billion euros over four years, in exchange for major reforms: taxation and pensions were reviewed.

The IMF also calls for more control of the public wage bill and improving the business climate to encourage investment.

" Blue book "

To try to get out of the crisis, a group of Tunisian economists proposed at the end of August a "blue book" containing a series of proposals.

Seventy economists and experts from the Econ4Tunisia initiative led by former Economy Minister Hakim Ben Hammouda, have identified six major challenges and put forward work plans. To reduce the public deficit, they advocate - among other things - a reform of corporate taxation through a harmonization around three rates. The revival of growth and investment could pass, in the eyes of this panel, by a digitization of the administration and an acceleration of the reform of public enterprises.

Another prescription: a modernization of economic governance through the creation of a National Economic Council. To see if this will inspire the future elected.

If the economy held a good place in the campaign, with a debate on the policies of austerity or the liberalization, Abdelfattah Mourou, the candidate of Ennahda, assured recently in the Figaro that no party had an economic program, it was a few days before the party introduced it and offered to help young people finance their projects. Youssef Chahed, outgoing prime minister and candidate for Tahya Tounes, wants to limit state interventionism and create " a free trade zone with Algeria ".

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