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Tunisia and the Libyan War

Francis Ghiles describes the worsening economic situation in Tunisia: Tunisia’s economic losses since the start of last winter’s revolt can be summed up as follows: an estimated $2bn worth of material damage suffered by buildings and infrastructure during the revolt, with a further $600m added to the existing import bill of oil related products and […]

Francis Ghiles describes the worsening economic situation in Tunisia:

Tunisia’s economic losses since the start of last winter’s revolt can be summed up as follows: an estimated $2bn worth of material damage suffered by buildings and infrastructure during the revolt, with a further $600m added to the existing import bill of oil related products and foodstuffs due to rising prices worldwide. Put another way, this is the equivalent of 5-6 per cent of its Gross Domestic Product, a fall which includes $1.2bn lost from the decline in tourist receipts and $1bn from events in Libya, home to many immigrant Tunisian workers and the destination of many Tunisian exports – white goods, foodstuffs and industrial equipment. North Africa’s smallest economy had benefitted over the years from the many Libyans who chose to spend considerable sums of money in Tunisian hotels and clinics. According to a recent survey by Ernst and Young, many Tunisian businessmen are more worried about the fall out from Libya than from the current situation in Tunisia, having confidence in their own country’s future.

Foreign Direct Investment declined by 24.1 per cent to 580m Tunisian Dinars ($420m) during the first four months of the year and industrial production fell by 9.4 per cent. Production in the mining sector dropped by 60 per cent, due to continued strikes. GDP has fallen by 3.3 per cent during the first three months and is not expected to be above 0-1 per cent for the year as a whole [bold mine-DL].

Unemployment, meanwhile, has increased from an estimated 14 per cent at the end of 2010 to 19 per cent – and is estimated at 750-800,000 people. Should unemployment figures reach one million, that could constitute a political time bomb. Unemployment in the regions where last December’s revolt took root, the western uplands around Jendouba, El Kef, Kasserine – and further south in the phosphate mining area of Metlaoui – is, at 18 per cent, twice what it is on the coast and affects up to 40 per cent of young people.

Tunisia was and remains the most promising of all of the countries in the region that have seen challenges to their authoritarian rulers in the last six months. The country was already going to have enormous difficulty adjusting after the fall of Ben Ali, and the Libyan war has made its plight worse. The longer that war drags on, the worse it will be for Tunisia’s economy and political future.

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