Tunisia’s once-vibrant economy struggles

Tunisia’s once-vibrant economy is struggling after weeks of violent protests that led to the downfall of strongman Zine El Abidine Ben Ali whose family formed the core of the Arab state’s business elite, experts said.

“The country needs to start up again because the economic reality is about to hit everyone,” the Tunisian BusinessNews website said in a commentary.

“The economic situation is getting worse,” it added.

The government estimates the country has so far suffered around 1.6 billion euros (2.2 billion dollars) in direct economic losses and lost export revenues — equivalent to around four percent of its gross domestic product last year.

“Who is going to feed those who suddenly find themselves unemployed today after the destruction and degradation,” Le Temps daily asked in an editorial.

It said 43 banks, 66 shops and 11 industrial plants had been destroyed.

A “protracted crisis could potentially be very damaging to the country’s economy given its reliance on tourism and foreign direct investment,” Moody’s Investors Service said in a note, as it dowgraded Tunisia’s credit rating. “The recent events will affect fiscal peformance and real growth in 2011,” the ratings agency said, adding that there were now “significant uncertainties surrounding both the economic and political outcomes.” Tunisia’s economy grew 3.8 percent last year despite the global crisis.

Moody’s said its credit downgrade reflected “the country’s instability due to a recent unexpected change of regime,” adding however that Tunisia had “a long track record of stable and forward-looking economic policies.”

The current economic situation is a bitter turn of events for Tunisia, which has been something of a poster-child for economic success in the region.

A report from the World Bank last October — before the start of social protests that led to Ben Ali’s ouster after 23 years of iron-fisted rule — was full of praise.

“Since the late 1990s, Tunisia has become one the leading economies in Africa in terms of competitiveness and, between 1996 and 2007, saw a doubling in exports of goods and services,” the report said.

But it also pointed to “persistently high unemployment” — estimated at around 14 percent — one of the reasons for anger against Ben Ali.

Arab League chief Amr Mussa said at an economic summit in Egypt that the social grievances that triggered Tunisia’s uprising were a region-wide problem. “The Arab soul is broken by poverty, unemployment and general recession,” he said. “The political problems... have driven the Arab citizen to a state of unprecedented anger and frustration,” he added.

AFP