Outlook for 2011-15

• It is uncertain whether the third interim government will be able to maintain security, even though it has been stripped of all members of the former ruling party, the Rassemblement constitutionnel démocratique (RCD).
• The political situation in Tunisia is likely to remain volatile if the interim government does not implement measures to create jobs and increase wages. There is a high risk that civil unrest will continue.
• The interim government plans to hold an election for a national constituent assembly on July 24th. The assembly will be responsible for rewriting the constitution and organising parliamentary and presidential elections.
• Islamist parties will try to secure a position in Tunisian politics and government but will be competing against a plethora of new political parties, which have recently been licensed, as well as existing parties.
• We expect government expenditure to increase substantially as the interim government implements measures to boost economic growth. With revenue sources declining, the budget deficit will widen to 9.5% of GDP in 2011.
• We estimate that real GDP growth in 2010 was 3.4%. We have revised down our growth forecast in 2011 to 0.8%, in line with government projections. Growth in 2011-15 is forecast to average 3.1%.
• The protests will have a negative impact on tourism revenue and trade, causing the current-account deficit to balloon in 2011 to 14.2% of GDP. The current account will remain in deficit over the forecast period, averaging 12.7%.

Monthly review

• Political protests have subsided since end-March but have been replaced by economic unrest, which has increased considerably.
• Attempts to remove the influence of the RCD have continued as those closely associated with the former president have been detained.
• Ties between Tunisia and Italy have come under strain as more than 20,000 Tunisians have entered Italy since the start of protests in December 2010.
• The interim government has unveiled an action plan to boost growth.
• Increased government spending driven by emergency measures to revive the economy has worsened the government's fiscal position.
• The employer's association, UTICA, has estimated that the two months of protests since January 14th have cost businesses TD400m (US$280m).
• Exports for the first two months of 2011 have increased, but industrial production has fallen.