Growth of 3 percent for Tunisia in 2018
Structural reforms are advocated to accelerate growth, boost employment, implement effective social policies and promote regional development.
The Tunisian economy is recovering from the impulse of good harvests and the dynamism of the tourism sector. This is the conclusion drawn by the first economic study of Tunisia published by the Organization for Economic Cooperation and Development (OECD). The report highlights the progress that the country has made in recent years, including greater participation in political life and new freedoms of expression and association, lower poverty rates and strong integration into global value chains, as per LeMatin.
However, the considerable challenges of weak job creation, high unemployment and a high deficit in public finances are also pointed out in this study. Structural reforms are advocated to accelerate growth, boost employment, implement effective social policies and promote regional development.
The study expects growth of nearly 3 percent in 2018 and 3.5 percent in 2019. The expansion will be driven by business investment, which should benefit from the simplification of procedures provided for by the new law on investment and the rebound in exports, which will be boosted by the recovery in European markets.
Strengthening the current economic recovery will require accelerating reforms, giving priority to measures to improve the business environment. Job creation and regional development will be the key to a more efficient and inclusive economy, says Alvaro Pereira, Acting Chief Economist of the OECD.
To put the public debt back on a more sustainable path, the institution advocates a gradual consolidation of public finances and structural reforms likely to support growth. As Tunisia already has a high tax rate, sanitation will have to be part of a medium-term perspective and give priority to controlling public spending, with greater concern for efficiency and equity, as per LeMatin.
Similarly, strengthening the governance of public enterprises and improving their financial performance will contribute to both healthier public finances and a more efficient economy.
According to OECD, the speeding up of structural reforms will be decisive for future growth and job creation. This will require easing the regulatory, administrative and financial burdens on businesses and creating a level playing field between public and private enterprises. The openness of the economy to competition should stimulate investment and employment while accelerating the diffusion of new technologies.
Job creation and regional development will continue to be key to achieving more inclusive growth, according to the study. The OECD recommends that the tax burden on formal employment should be reduced by transferring the financing of certain social benefits to general taxation.