GDP growth in Tunisia projected at 1.2% for the whole of 2023, a downward revision of 1.1% from the June 2023 forecasts.
In addition, a 3% growth rate is anticipated in 2024 and 2025, according to a new report by the World Bank titled Global Economic Prospects, which was released on Wednesday.
Indeed, this report validates the identical projections that were put forth in a WB economic situation report on Tunisia that was released last November.
The estimated GDP growth rate for Tunisia in 2023 was 1.2%, which represents a moderate recovery in comparison to other countries in the region and is half the rate of growth from 2022. A 3 percent growth forecast for 2024 is susceptible to risks arising from the progression of the drought.
According to the World Bank’s Fall 2023 Economic Monitor of Tunisia, the nation continued to contend with persistent drought, external financing challenges, rising domestic debt accumulation of vital public service enterprises, and regulatory obstacles, all of which slowed Tunisia’s economic recovery in the first half of 2023.
As noted in the report, “the recent conflict in the Middle East has dampened tourism-related activity, particularly in neighboring countries, and increased geopolitical and policy uncertainty in the Middle East and North Africa (MNA) region.” MNA was already confronted with a number of obstacles, such as reduced oil production, elevated inflation, and sluggish private sector activity in oil-importing economies. The expansion of MNA decelerated significantly to 1.9 percent in 2023.
According to the WB, “the conflict in the Middle East has increased the degree of unpredictability surrounding regional growth projections.” Under the assumption that the conflict does not escalate, MNA growth is projected to increase to 3.5% between 2024 and 2025. Predictions have been adjusted higher in comparison to the previous month of June, in light of oil exporters experiencing more robust growth than anticipated, which has been bolstered by a recovery in oil activity.
“GCC countries are anticipated to experience growth rates of 3.6% in 2024 and 3.8% in 2025.” An expansion in oil production and exports is anticipated to contribute to a recovery in growth in Saudi Arabia, notwithstanding the extension of voluntary oil production limits into the current year. The relaxation of production limits in early 2024 is anticipated to stimulate oil production expansion, which is anticipated to contribute to accelerated growth in Algeria and Iraq, among other oil exporting nations.
“Growth is anticipated to increase marginally to 3.2% for oil importers this year and 3.7% by 2025.” Some nations, such as Djibouti, Morocco, and Tunisia, will experience an increase in economic growth; however, those nations in closer proximity to the conflict will be more severely impacted. The ongoing conflict in Egypt is anticipated to worsen the inflationary pressures, restrict private sector activity, and heighten external account strains due to diminished tourism revenues and remittances. Jordan’s tourism industry will also be negatively impacted by the conflict.
“A significant detriment to regional development is the conflict’s escalation, which could result in the influx of refugees and spillover effects on neighboring economies.” MNA nations are susceptible to natural catastrophes, and the frequency and intensity of such events are further exacerbated by climate change. If demand weakens or oil prices decline, oil exporters may be compelled to restrict oil production, which may result in the extension of supply cuts. Tighter global financial conditions would diminish the growth prospects of oil importers due to their substantial reliance on external financing.
It is anticipated that global growth will decelerate for the third consecutive year, from 2.6% in 2017 to 2.4% in 2024, which is nearly three-quarters of a percentage point below the 2010s average. It is anticipated that developing economies will expand by a mere 3.9%, which is over one percentage point lower than the decade-long average. GDP growth slowed to its lowest level in thirty years during the most recent Global Economic Prospects report from the World Bank.
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