Tunisia predicts growth of 4.5 per cent in 2013

The Tunisian Planning and Regional Development Minister predicts GDP growth of 4.5% in 2013. This would be up from the 3.5% growth predicted for 2012.

The Tunisian economy has only gradually recovered from the turmoil during the overthrow of President Ben Ali in January 2011. The slow pace of economic growth has led to many being disappointed with the results of the revolution.
Back in March of this year the government cut its growth forecast from 4.5% to 3.5%. There were declines in tourism and also foreign investment. Tunisian exports are also suffering from the lack of demand from Europe as the debt crisis there continues. In December of 2011 the Tunisian government foresaw growth of 4.5% in 2012.
The moderate Islamists elected to run the country are business friendly but there have been clashes between them and leftist secular opponents.There are also more radical Islamists challenging the moderates. During 2011 the economy actually shrank by 1.8%. The situation is improving considerably in 2012 even though progress is slow and unemployment high.
Tunisia has been helped by Qatar a strong backer of the revolution. Qatar has loaned Tunisia $500 million U.S. The moderate Islamist Ennahda party coalition government has excellent relations with Qatar. Turkey has also extended Tunisia a 500 million dollar line of credit.
Jamel Charbi the Planning and Regional Development Minister claims that the 4.5% growth predicted for next year can be met by boosting consumption and investment as well as consolidating exports. His statement was intended to counter some observers' pessimistic forecasts about the economic future of the country.
Charbi said that 22.7 per cent of GDP would be allocated to public investment next year to help manufacturing and mining to recover. He said this would create 90,000 jobs. The government has managed to keep interest rates low and inflation in check. On the other hand the government has been hit by resignations including that of the finance minister and the governor of the central bank.
Even under Ben Ali Tunisia had the highest GDP per capita in the area. The population of ten million revolted in part because of economic conditions and hence is impatient for better times to come soon. However given the problems in Europe economic growth will probably remain relatively modest at most. Even at that, they are doing much better than many countries in southern Europe.


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U.S. job growth above expectations in July

While the forecast was for July growth of just 100,000 jobs the actual number was over fifty per cent higher at 160,000. This is the most workers to be hired in the last five months. At the same time unemployment rose slightly to 8.3 per cent.


The increased unemployment may cause investors to believe that there could still be government attempts to stimulate the economy later. However the high employment numbers led to double digit gains in the DOW Jones index this morning (August 3rd) Even though more people have given up the search for work the jobless rate rose from 8.2 per cent to 8.3 per cent last month.


One can expect the Democrats to crow about the big increase in job numbers and the Republicans to complain about the slight increase in unemployment. Numbers from one month however fail to tell much about longer term trends.


Employment figures for May and June were revised downward slightly and indicate that 6,000 fewer jobs were generated than reported ealier. In spite of the July increase in jobs many economists think that at the next policy meeting of the Fed in September a third round of quantitative easing through bond purchases may be initiated.


To stimulate borrowing and investment interest rates have been kept almost at zero by the Federal authorities. They have also pumped almost $2.3 trillion into the economy. In spite of these actions the U.S. economy is slowing down and growing only slowly during 2012.


The economic situation may hurt Obama's reelection chances, A recent Ipsos/Thomson Reuters poll shows 36 per cent of registered voters believe that Romney has a better economic plan than Obama. This contrasts with only 31 per cent who think that Obama has the better plan. While the economy is an important issues no doubt other issues as well will play an important role in the election. For more see this article.