Tunisia's Economy Shows Signs of Recovery in Q1 2024
Tunisia's economy has shown signs of recovery in the first quarter of 2024, with a 0.2% growth in GDP compared to the previous year, following a stagnation in the previous quarter. According to the Central Bank of Tunisia's note on economic and monetary developments and inflation prospects, this slight progress reflects the contrasting dynamics of different economic sectors.
Agricultural Sector
After a historic 10.7% decline in 2023, agricultural production has started to recover, recording a 1.6% increase in the first quarter of 2024. This rebound has positively contributed to GDP growth (+0.14 percentage points) and has led to a 24% increase in agricultural employment, adding 104,000 jobs. However, the sector remains vulnerable due to persistent water stress, particularly affecting livestock. Despite this, vegetable and fruit production has shown remarkable resilience, and prospects for better cereal production are optimistic.
Services Sector
According to the same note, the services sector has recorded a 1.9% growth in the first quarter of 2024, following a 1.5% increase in the previous quarter. Financial services, healthcare, telecommunications, and other household activities have supported this growth. However, certain sectors such as hospitality and restaurants are struggling to recover to pre-pandemic levels, showing a 20% decline. The transportation sector, with a value-added decline of 9% compared to pre-pandemic levels, is also suffering from weak investments and reduced capacities.
Industrial Sector
Despite a slight slowdown, mechanical and electrical industries (IME) have maintained their dynamism thanks to high exports, supported by previous foreign investments. On the other hand, non-manufacturing industries have seen their value-added significantly decrease. Oil and natural gas production has decreased by 17.1%, exacerbated by a slow energy transition and production declines in major fields. The mining sector has also suffered, with a decline in phosphate production, depriving the country of significant foreign exchange earnings.
Domestic Demand
Domestic demand has slightly increased by 0.4% in the first quarter of 2024, following a 0.1% decline in the previous quarter. This rebound has been mainly supported by wage increases in the public and private sectors, contributing to a persistent imbalance between demand and supply, maintaining pressure on prices.