Tunisia growth slows sharply in Q2 after militant attacks

TUNIS: Tunisia's economic growth slowed sharply in the second quarter to 0.7 per cent year-on-year, official data showed, after two Islamist militant attacks on a museum and a beach hotel crippled its tourism industry. The economy had expanded 1.7 per cent in the previous quarter compared to the same period a year earlier.

Tunisia's tourism industry, which makes up about 7 per cent of the economy, slowed in June after a gunman killed 38 mostly British tourists in the seaside city of Sousse. In March, two gunmen killed 21 foreign tourists and a policeman at Tunis's Bardo Museum. Both attacks were claimed by Daesh and prompted several countries to ban travel to Tunisia. Strikes and protests have also disrupted the country's vital phosphate exports. Tunisia has already cut its GDP growth forecast to 0.5 per cent this year, down from an initially expected 3 per cent. In 2014, Tunisia posted GDP growth of 2.3 per cent.

Tunisia turned its attention to reviving its economy after it completed a transition from the dictatorship of Zine Al Abidine Bin Ali, who was ousted in a 2011 uprising, to a democracy with free elections and a new constitution. The government expects the budget deficit to narrow to 5 per cent of gross domestic product in 2015 from 5.8 per cent last year. But Tunisia is also under pressure from international lenders to reduce public spending, including subsidies on basic foods and fuel, and to cut the deficit further to help economic growth even as social tensions make cost-cutting sensitive.