x Abu Dhabi, UAEWednesday 17 January 2018

Taking stock of a nation's economic wreckage

the IMF believes political change in Tunisia may eventually spur economic growth

TUNIS // As the two-month anniversary of Tunisia's revolution approaches tomorrow, economists are beginning to take stock of the wreckage the turmoil has inflicted on the nation's commerce.

While the IMF is still tallying the short-term damage, Masood Ahmed, the fund's head economist for the region, said political change may spur economic growth.

"Following the revolution, the medium-term outlook for economic growth in Tunisia is potentially even more favourable," he said.

"With improved governance and transparency in the economy, the allocation of resources could become more efficient and lead to larger investment. Together with a well-educated workforce, this could contribute to enhancing potential growth over the medium term."

Achieving the growth rates of the past - Tunisia's economy grew by more than 4 per cent a year for much of the past decade - was crucial to solving pervasive problems such as rampant youth unemployment, Mr Ahmed said. But making those dreams come true hinged on a smooth political transition, prudent economic policies, sufficient financing for job creation and a restoration of investor confidence.

And as for the short term, the impact of the slowdown caused by the unrest in Tunisia, where many factories have been burnt down and tourism has ground to a halt, is already being felt far and wide.

Looking further into the future, Tunisia also faces many other uncertainties in its bid for a return to economic stability, economists say.

The former Ben Ali regime's corruption crimped growth because investment and business expansion was regarded as pointless, said Moncef Cheikhrouhou, a Tunisian economist. If corruption-busting efforts succeed, economic growth gets a boost of between 2 to 3 percentage points, he said.