The Tunisian economy is facing a sharp recession, as it has experienced two quarters of decline in GDP. The first quarter of this year was difficult, with economic growth of -3.3%. The second quarter has not been easier due to the implications of the first quarter. The size of the Tunisian economy has decreased.
An economy in recession is marked by a significant decline in economic activity spread across the country. It is visible in real GDP, real income, employment, industrial production. Unemployment is considered as Tunisia’s greatest challenge, and recession is just making things worse.
The average growth of the Tunisian economy in recent years before this recession was between 4% to 5% per year, which was insufficient but positive. A point of growth in Tunisia is about 600 million dinars of income. Losing 8 points of growth means losing 4,800 million dinars for one year or 2,400 million dinars in lost wealth for a semester – a huge loss for a humble economy.
In terms of jobs creation, a point of growth represents approximately 13,000 new jobs. 8 points lower GDP growth is approximately 100,000 jobs that could have been created in one year but simply were not.
Any country that has undergone a revolution and is experiencing a democratic transition would encounter economic turbulence. There is no need to overreact and dramatize the situation. However, it is essential to maintain the economy and save what can be saved, because an economy in recession may progress to an economy in crisis, and an economic crisis can turn into a social crisis.
It is clear that the world is following Tunisia and watching it closely as a laboratory of a very unique type of democratic experience. The help and the support of some countries is apprecated and even welcomed. However, it should not be redundant or free because massive aid has hazardous long term effects on economy.
The state of Tunisia as well as the state of its economy require immediate courageous initiatives. An example of urgent measures would be to quickly pass a law to temporarily ban strikes until the end of 2011. Such an initiative would convey a strong message to reassure companies that are the main source of wealth and jobs creation.
Tunisia is facing several challenges. People revolted againt the previous system because they aspired for better living conditions and not to make their country sink in foreign debts. Overcoming the current economic recession will pave the way for a smoother democratic transition.