Demand for Raw Material Slips in Tunisia

Business

March 6th, 8:35am

Tunis- Al Mongi Al Saidani

Tunisia’s Central Bank | Reuters

The Central Bank of Tunisia (BCT) has reported a fall in domestic demand for raw material and semi-manufactured goods in Tunisia, in a record-rate during the past year. The drop was estimated at 266 percent in some production sectors, said BCT, ruling out the possibility of this decline resulting from the government restrictions against 220 imported items. In April 2017, Tunisia approved a new law that aims to stimulate investment and grant tax privileges to foreign and local capital. However, the results didn’t reflect the Tunisian authorities' keenness on staging a new investment climate and were below expectations. The BCT reported that domestic demand over raw material dropped by 112 percent. Central Bank Governor Marwan Abbasi attributed the weakness of direct and indirect investments in Tunisia to several factors, including circumstantial reasons that go back to the challenging economic condition regarding revenues of dealers, not taking decisive procedures towards investments in the Tunisian market, the rise of banking rates, and weakness of domestic savings. Further, the Central Bank forecasts average annual inflation of 5.3 percent for 2020 compared to 6.1 percent at the end of December 2019. Inflation reached its peak in 2018 with 7.3 percent. The fresh food inflation is expected to drop gradually from 8.3 percent in 2019 to 6 percent in 2020 and 5 percent in 2021. The gradual increase of production and the absence of significant demand pressures should contribute to the deceleration of this component of consumer prices. The Governor has affirmed that this progress was due to a financial policy adopted by the bank last year, among expectations of more control over the inflation to boost the purchasing power of Tunisians.

from Asharq AL-awsat https://aawsat.com/english/home/article/2165796/demand-raw-material-slips-tunisia