Tunisia Business Forecast Report Q1 2013

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook

Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Short-Term Political Outlook Deteriorating
Political divisions in Tunisia are deepening, while violence is increasing and the process of writing the countrys constitution is meeting
significant hurdles As a result, we have lowered our short-term political risk ratings for the country
TABLE: POLITICAL OVERVIEW
Political Challenges For The Coming Decade: A Brighter Future?
Tunisias political transition in 2012 will have a profound impact on the countrys long-term political and economic future While there are
significant risks to be addressed, we are optimistic regarding the countrys ability to evolve into a stable democracy, boding well for longterm
economic growth

Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Political Instability Constraining Growth
We forecast real GDP growth in Tunisia to increase 3 0% and 3 1% in 2012 and 2013 respectively Although an increase in exports will
support growth in 2013, continued political instability will ensure that the pace of economic expansion remains well below potential over
the coming years
TABLE: ECONOMIC ACTIVITY
Monetary Policy
Interest Rate Hike Likely Before End-2012
We forecast that the Central Bank of Tunisia will hike interest rates by a further 25 basis points to 4 00% before end-2012, in an effort
to rein in inflationary pressure and attract foreign capital Although the move could help to alleviate public unrest over the short term by
helping to control price pressures, the countrys economic recovery will slow as a result, which will serve to keep political risks elevated
TABLE: INFLATION
Fiscal Policy
Deficit Remaining Elevated In 2013
We see Tunisias budget coming into deficit to the tune of 7 9% of GDP and 7 8% in 2012 and 2013 respectively While public
expenditure will grow faster than planned, tax revenues will remain anaemic, and the country will increasingly rely on issuing debt as a
result
TABLE: FISCAL POLICY
Regional: Sovereign Risk Ratings
Sovereign Risks Building Beneath The Surface
Our Sovereign Risk Ratings (SRR) update for the Middle East and North Africa (MENA) paints a worrying picture of the macroeconomic,
political and financial market throughout the region
TABLE: MENA – EVOLUTION OF ABILITY TO PAY
TABLE: MENA – SOVEREIGN RISK RATINGS
TABLE: MENA – EVOLUTION OF WILLINGNESS TO PAY
Industry Forecast
Islamic Finance: A Crisis Of Confidence?
The recent decision by HSBC to scale-bank its Islamic banking retail operations around the world is a potentially ominous sign for the
future advancement of an industry, which is still in the embryonic stages of development

Chapter 3: 10-Year Forecast
The Tunisian Economy To 2021
Human Capital To Support Long-Term Growth
While social unrest is sure to weigh on Tunisias growth prospects, we expect the economy to bounce back over the medium-to-long
term, as the country slowly returns to political stability The countrys relatively favourable business environment, along with high human
capital development, will attract significant levels of foreign investment, which will help drive private consumption
TABLE: LONG-TERM MACROECONOMIC FORECASTS
TABLE: MIDDLE OF THE ROAD IN MENA, LEADING NORTH AFRICA: SELECTED BUSINESS ENVIRONMENT FACTORS

Chapter 4: Business Environment
SWOT Analysis
BMI Economic Risk Ratings

Chapter 5: BMI Global Assumptions
Global Outlook
Mixed Signals For The New Year
TABLE: GLOBAL ASSUMPTIONS
TABLE: DEVELOPED STATES REAL GDP GROWTH FORECAST
TABLE: REAL GDP GROWTH CONSENSUS FORECASTS
TABLE: EMERGING MARKETS REAL GDP GROWTH FORECAST 35