Weak Q1 2024 GDP Performance Confirms Tunisian Economy's Sluggish Growth
The Tunisian economy's sluggish growth trap has been confirmed by the weak quarterly GDP performance in Q1 2024. According to the National Institute of Statistics (INS), the quarterly GDP grew at a rate of 0.2% year-over-year in Q1 2024. This slowdown in growth is attributed to mixed developments in the main economic sectors. The growth rate of the market-based GDP decreased to -0.2%, while non-market activities (administration, associative organizations, etc.) increased by 1.5% in Q1 2024. This trend, observed over several quarters, reflects the contraction of productive economic activity.
Industrial Sector's Value-Added Decline Reflects Structural Problems
The industrial sector's value-added decreased by 5% in Q1 2024; this decline is due to a general decrease in industrial sectors, particularly in the agro-food, textile, non-metallic mineral products, oil and natural gas extraction, electricity and gas production and distribution, and construction sectors. The conjunctural indicators show:
- A decline in the textile, clothing, and leather sector's value-added over three consecutive quarters, accompanied by a decline in exports from this sector over several months.
- A contraction in the activity of the non-metallic mineral products sector (cement, ceramics, glass, etc.) due to a slowdown in domestic demand.
- A continuous decline in the construction sector's value-added over two years, caused by the sluggishness of economic activity and the deceleration of public investments.
- A decrease in the electricity sector's value-added due to a decline in national production.
- A decline in the oil and natural gas extraction sector's value-added, explained by structural problems in the sector, including the natural decline of fields and delays in granting exploration permits.
The decline in the value-added of these sectors, which have high export potential and diversified employment, could negatively impact growth prospects, despite the expected relative performance of the agricultural sector during the remaining period of the year, thanks to a favorable base effect.
Timid Growth Prospects and Below Potential
The growth outlook for the entire year 2024 is estimated to be around 1.3%; the growth rate recorded in 2023 was around 0.4%. This sluggish growth, combined with high inflation rates exceeding 7%, testifies to the economy's stagnation in a stagflation phase. Given the fragility of the economic situation and the slowdown of growth engines, it is imperative to accelerate the implementation of structural reforms to boost the level of potential growth. Reviving growth is a national priority.