October 2008 - During the past decade, Tunisia’s growth averaged 5 percent with a capacity to resist external economic threats thanks to the establishment of structural reform and a prudential macroeconomic management. Yet, this performance is insufficient to reduce unemployment, which stands at 14 percent. A growth rate even higher is deemed necessary to achieve the government’s employment objectives. Nonetheless, Tunisia is entering a new phase in its integration process and despite the impressive results achieved so far, important challenges remain. The 11th plan’s growth (2007-2011) considers global integration is one of the main reliances to boost growth The 11th plan’s growth targets a growth of 6.1 percent. This would require a significant increase in investment and exports. Precisely, investment (including FDI) would need to increase significantly from 23 percent of GDP currently to 25.3 percent by 2011.
Second, trade needs to play an even greater role than in the past, as exports and imports should increase annually by 7 and 6 percent respectively. Since the early 1970s, Tunisia’s trade policy has rested on three pillars : The first is promoting exports, through generous incentives to attract foreign direct investments (FDI) in the “offshore” sector, incentives to exporting firms, and trade agreements.
The second is protecting domestic industries and strictly regulating markets.
Since mid-nineties, national industries have been gradually deprotected .
The third pillar is more recent, and concerns trade facilitation.
Tunisia’s trade opening approach has been preferential (its opens up vis-à-vis preferential partners and maintains a high protection vis-à-vis non-preferential partners).
The country now faces a dilemma: maintaining the current large gap between preferential and the “most-favored nation” tariffs may fuel fraud and parallel market while reducing the gap may hurt production and jobs.
The Study "Tunisia’s Global Integration, Second generation of reforms to boost growth and employment" : · It takes stock of the past integration policies, evaluating their impact on FDI flows to the country, exports and employment. · It examines the current challenges for Tunisia’s integration in the global economy as well as the key remaining reforms needed to further enhance the competitive position of the country in the Euro-med space. · It identifies the specific reforms needed to realize the largely untapped potential in services.
Data on Tunisia · Employment in the offshore sector reached 245,000 persons, representing 54 percent of total manufacturing jobs and 8 percent of all jobs in the country.
· The tariff faced by EU industrial products is now zero, the one faced by non-preferential partners is 24 percent.
· The services sector has an average annual growth rate of 5.6 percent over the last 10 years.
· 80 percent of Tunisia’s services export revenues come from tourism, travel, and transport services.
· In Tunisia, creating an offshore firm requires 67 percent of capital in foreign currency.
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