“The country’s economic and political transition is proving longer and more difficult than anticipated,” Fitch Ratings wrote in the report. “Longer transition periods and election campaigns are not conducive for macroeconomic reforms and could fuel social unrest.”
Fitch downgraded Tunisia’s long-term foreign currency IDR to BB+ from BBB- and Long-term local currency IDR to BBB- from BBB, both with Negative outlooks.
In the aftermath of the January 2011 revolution, Fitch downgraded Tunisia’s credit rating from BBB to BBB-, citing the economic and political uncertainties afflicting the North African nation. The agency affirmed those ratings in early 2012, noting at the time that they had the potential to fall if the economic recovery did not take hold.
In today’s report, Fitch said that, in addition to social and political unrest, high budget and current account deficits are putting downward pressure on the nation’s ratings. The agency expects both deficits to rise in 2012 and 2013.
The report expects real GDP to grow to 2.8% in 2012 and 3.5% in 2013,with the help of rising consumption and “accomodating” monetary and fiscal policy.
“This has helped the country to partly offset the recession in the eurozone and crisis in Libya, its main trading partners, but growth remains below historical trends,” Fitch wrote in today’s release.