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Economic outlook 03, 2017

A recovery in global economic growth is expected.

A recovery in global economic growth is expected in 2017 in relation to the expected improvement in developed countries.


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Global world economic growth in 2016 was the weakest (2.3%) since the financial crisis of 2008 due to low investment and high levels of indebtedness. A recovery in global economic growth is expected in 2017 in relation to the expected improvement in developed countries.

The fiscal stimulus policy advocated by the new US President has given a new impetus to growth to 2.5%, which would affect the global economy favorably despite the risk of US protectionism affecting some countries (Mexico, China).

The Government support policy in Japan and the strong public investment and real estate development in China provided better than expected performance in these countries. In addition, euro area countries benefited from ECB support to improve their growth rate to 1.7% in 2016
In Tunisia, a recovery of economic growth is expected in 2017 linked to a better tourism season and to a higher phosphate production. However, the oil production is declining and will affect negatively public revenues and the foreign deficit.

According to Central Bank of Tunisia (February 13th, 2017) “pressures on the foreign exchange market could result in a higher depreciation of the dinar and an increase in the price of imported products". This would aggravate inflation, which is already rising.

In 2017, both fiscal and foreign deficits ratios to GDP are expected to decline, but this is in fact linked to the expected GDP growth of around 7% at current prices. In absolute terms, the two deficits are even slightly higher than the absolute level of 2016. They will finance public investments planned for the economic recovery But, is Tunisia able to finance these deficits; this would be the case if the IMF authorizes, as expected by the authorities, the second and third disbursements of the loan obtained in May 2016.

The IMF postponed the release of the second payment of the loan ($ 320m) after last November's assessment in relation with the postponement of public finance reforms. An evaluation will take place at the end of March.
A positive result will also raise doubts about the reactions of other multilateral donors who have promised to support Tunisia: WB ($ 500m), ADB ($ 300m), EU ($ 500m).

To this end, the Government plans to accelerate the reforms:

• Reform of the civil service by reducing the number of staff (by 10,000 up to 2020) through voluntary retirements.
• Reform of the public financial sector through greater private participation in large public banks and a sale of interests in other banks (Zitouna and other mixed banks).
• Reform of social security by extending working years (by 2 years) and a possible social VAT (1 to 2 points), pending a review of contribution rates and benefits for long-term equilibrium
• Follow up of state owned enterprises financial situation.

IMF urges also speeding up the adoption of the Law on the Reform of Public Accounting system.

© 2020 FMBZ KPMG Tunisie, a Tunisia joint stock company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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