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World Bank Lowers Growth Forecast for Tunisia

Women shop at Sidi Bahri market in Tunis, Tunisia (File photo: Reuters)
Women shop at Sidi Bahri market in Tunis, Tunisia (File photo: Reuters)
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World Bank Lowers Growth Forecast for Tunisia

Women shop at Sidi Bahri market in Tunis, Tunisia (File photo: Reuters)
Women shop at Sidi Bahri market in Tunis, Tunisia (File photo: Reuters)

The World Bank has just revised its growth forecasts downwards for Tunisia, dropping it from a previous forecast of 3.5 percent to 3 percent in 2022.

The report prepared by the bank, entitled "Forecasting Growth in The Middle East and North Africa in Times of Uncertainty," indicated that Tunisia's economic prospects remain uncertain, especially that the economic resilience in 2021 was moderate, and that concerns related to debt repayment remain strong due to budget deficit and high financing needs.

The bank highlighted that the modest growth is due to the economy's close link to tourism, tight budget margins, challenging business climate, and restrictions on investment and competition.

The report pointed out that Tunisia is a supplier of energy and grain and remains vulnerable to increasing international raw materials prices due to extreme uncertainty, such as the current war in Ukraine.

Tunisia is facing challenges in maintaining its food subsidies.

"Rising oil prices could delay reforms, however, as subsidies might rise with global food and energy prices," according to the report.

The World Bank noted that the growth rate in Tunisia would achieve gains, but it remains modest in light of "the structural volatility," the economic situation, the repercussions and the uncertainty of the war in Ukraine, and the sanctions associated with it.

The bank expected the inflation rate to reach 6.5 percent in 2022 and 2023 and the poverty rate to reach 3.4 percent in 2022 and drop to 3.1 percent in 2023.

Tunisian expert Ezzedine Saidan believes the figures and indicators are optimistic, noting that the local economy is still under solid shock at energy and grain prices, which Tunisia depends on for supply.

Saidan warned that if commodity prices continue to rise, the cost will double on the local economy, and such results may not be achieved again.

The Ministry of Finance predicted a medium growth rate in the coming years, announcing in a February report that the growth rate will reach 2.5 percent in 2023 and 2024, then three percent in 2025 and 2026.

The Ministry indicated its adherence to reducing the budget deficit, adding that wages should be dropped to 14.4 percent of the gross domestic product in 2024 compared to 16.4 percent in 2020.

Subsidy expenditure should decrease from 3.8 percent of GDP in 2020 to 2.1 percent in 2024.

The government aims to gradually reduce its budget deficit by 2026 from 8.9 percent of GDP in 2020 to 6.2 percent in 2022 and 2023, then 5.3 percent in 2024.

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Business

Dollar Inches Higher as 10-Year Treasury Yield Climbs to Highest Since 2007

The dollar's six-currency index rose 0.15% to 99.633, also gaining support from weakened risk appetite as shares markets tumbled. (Reuters)
The dollar's six-currency index rose 0.15% to 99.633, also gaining support from weakened risk appetite as shares markets tumbled. (Reuters)
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Dollar Inches Higher as 10-Year Treasury Yield Climbs to Highest Since 2007

The dollar's six-currency index rose 0.15% to 99.633, also gaining support from weakened risk appetite as shares markets tumbled. (Reuters)
The dollar's six-currency index rose 0.15% to 99.633, also gaining support from weakened risk appetite as shares markets tumbled. (Reuters)

The dollar strengthened towards a two-week high on Tuesday, as surging oil prices pushed Treasury yields to fresh peaks since 2007, and cemented expectations for a Federal Reserve rate hike this week.

The benchmark US 10-year Treasury yields reversed an earlier loss and climbed to a high of 5.0266% in Asian trading hours, the highest since 2007.

Oil prices held near a four-month peak, standing at $107 a barrel, after Yemen's Iran-aligned Houthis launched a new wave of attacks on Saudi Arabia and Gulf-Iran talks were postponed.

Markets ‌now see a ‌Fed hike on Wednesday as a near certainty, with ‌CME's ⁠FedWatch tool pricing ⁠in a roughly 93% chance of an interest-rate increase.

"The combination of higher oil, higher US yields and weaker risk appetite helped lift the US dollar broadly," Christopher Wong, an FX analyst at OCBC, said in a note.

Near-term support may persist, but with a hike now heavily priced in, further dollar upside will likely require the Fed to keep the door open to additional tightening, he added.

Pressured by broad greenback strength, ⁠the euro hovered near a one-month low at $1.535 and sterling ‌was 0.1% weaker at $1.3485.

The yen also pulled away from ‌a seven-month high, standing down roughly 0.4% at 154.91 ahead of an expected Bank of ‌Japan rate hike on Friday.

The New Zealand dollar dipped 0.3% to a ‌two-month low of $0.5757, while the Australian dollar was also 0.2% lower at $0.7120.

The dollar's six-currency index rose 0.15% to 99.633, also gaining support from weakened risk appetite as shares markets tumbled.

RATE HIKES AWAITED

The renewed energy-induced inflation pressures follow a jobs report that was much stronger than expected and a ‌pickup in consumer prices for August, strengthening market conviction that the Fed will raise rates on Wednesday.

Economists polled by Reuters ⁠also expect at ⁠least one more hike by the end of March, reversing a fragile no-change consensus prior to Friday's official data showing firm inflation.

The inflation outlook now hinges on oil prices, but the broader macro picture does not warrant more hikes than currently priced in the curve, analysts at BCA said in a note.

"Limited hawkishness from here argues for curve steepeners and limited USD upside."

Markets are also all but certain that the Bank of Japan will raise rates on Friday. Market sentiment on the yen is starting to shift, with speculators turning to a net long position on the Japanese currency for the first time since February.

Offshore yuan was flat at 6.708 per dollar, hovering near its strongest in more than three years, after data showing China's industrial sector regained strength in August, though consumption remained sluggish.

Business

Tech Boom Powers China’s Factories but Economic Imbalances Deepen as Consumption Slows

People visit a cutting-edge technology festival at the Zhongguancun, a landmark park of Hi-tech enterprises in Beijing on September 12, 2026. (AFP)
People visit a cutting-edge technology festival at the Zhongguancun, a landmark park of Hi-tech enterprises in Beijing on September 12, 2026. (AFP)
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Tech Boom Powers China’s Factories but Economic Imbalances Deepen as Consumption Slows

People visit a cutting-edge technology festival at the Zhongguancun, a landmark park of Hi-tech enterprises in Beijing on September 12, 2026. (AFP)
People visit a cutting-edge technology festival at the Zhongguancun, a landmark park of Hi-tech enterprises in Beijing on September 12, 2026. (AFP)

China's industrial sector showed renewed strength in August as the AI-driven tech boom fueled factory output, though sluggish consumption and a worsening investment slump reinforced concerns over deepening economic imbalances.

Tuesday's data highlighted a familiar fault line in the world's second-largest economy, where resilient manufacturing and exports are sustaining growth even as weak household spending and a property market downturn weigh on domestic demand. The divergence is likely to intensify pressure on Beijing to roll out more support measures as policymakers seek a more balanced recovery.

Industrial output grew 5.2% from a year earlier in August, quickening from a 4.5% increase in July and beating expectations for a 4.8% rise, figures released by the National Bureau of Statistics showed. Strong expansion in equipment and high-tech manufacturing underpinned the production upturn.

Retail sales, a gauge of consumer activity, ‌rose 0.4%, slowing from ‌a 0.6% gain in July and below an expected 0.8% rise.

Weak consumption and the ‌real ⁠estate market crisis ⁠dragged second-quarter gross domestic product growth to 4.3%, the slowest pace in more than three years and below the lower end of China's 4.5%-5.0% annual target.

"Barring an unexpectedly strong September, GDP growth will likely remain sluggish in the third quarter," said Lynn Song, ING's Greater China chief economist.

Oxford Economics lowered its 2026 growth forecast by 0.1 percentage point to 4.7% and cut next year's to 4.3%, from 4.6%, "reflecting a more prolonged property downturn which is likely to keep growth subdued despite stronger public investment," senior economist Sheana Yue said.

The data barely moved China's markets, leaving the key stock benchmarks down roughly 0.3% while the yuan weakened slightly against the dollar.

PROPERTY SLUMP, TECH BOOM

The ⁠latest data underscored the scale of the challenge facing policymakers as businesses remain reluctant to ‌commit new capital and the property market continues to sap consumption and restrain growth.

Fixed-asset ‌investment, which includes infrastructure and property investment, declined 7.2% in the first eight months, marking the steepest drop since April 2020.

Property investment dived ‌19.9% in the first eight months from the same period last year, and new home prices extended declines from the ‌previous month, signaling a housing market still trapped in a prolonged downturn.

Against that backdrop, strong exports driven by AI infrastructure spending and demand for advanced technology products are providing a critical buffer for growth.

Investment in high-tech industries expanded 5.2% in the January-to-August period, in keeping with the global AI boom. Output of lithium-ion batteries and industrial robots, for example, soared 57.2% and 34.6% year-on-year, respectively.

Behind the divide is a government push ‌to guide resources to the advanced manufacturing sector to reduce the economy's reliance on property and bolster technological self-sufficiency, but the surge in high-tech investment has yet to translate into stronger ⁠household incomes or greater ⁠job security.

The nationwide urban surveyed unemployment rate came in at 5.3% for August, edging up from 5.2% the previous month.

GOVERNMENT PLEDGES FISCAL SUPPORT

Factory activity improved last month, but it remained in contraction and services activity stayed sluggish. Weak domestic demand also weighed on credit growth, as new bank loans returned to positive territory but fell well short of analysts' forecasts after a record contraction in July.

Extreme weather likely remained a drag on activity. Four typhoons made landfall in China during August, disrupting operations in the east-coast manufacturing and logistics belt.

Growth also faces mounting external headwinds, including the Middle East conflict, elevated oil prices and a global tightening cycle that is keeping borrowing costs high.

"The external environment is complex and challenging, while domestic structural adjustment pressures persist, meaning sustained efforts are still needed to put the economy on a firmer growth trajectory," Fu Linghui, a spokesperson at the statistics bureau, told a briefing.

Beijing has responded to the challenges with faster government bond issuance and expanded loan interest subsidies for small private firms and consumers, while the central bank has pledged additional policy support without signaling explicit cuts to policy rates or banks' reserve-requirement ratio.

"Policymakers' reluctance to deploy a more forceful consumption-focused stimulus is likely to prolong the adjustment process," analysts at Barclays said in a note to clients.

Business

China’s Fossil-Fueled Power Output Falls 4.3% in August as Clean Energy Gains

This picture shows the construction site of the CNNC Tianwan Tidal Flat Photovoltaic Demonstration Project in Lianyungang, in eastern China's Jiangsu province on September 15, 2026. (CN-STR / AFP)
This picture shows the construction site of the CNNC Tianwan Tidal Flat Photovoltaic Demonstration Project in Lianyungang, in eastern China's Jiangsu province on September 15, 2026. (CN-STR / AFP)
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China’s Fossil-Fueled Power Output Falls 4.3% in August as Clean Energy Gains

This picture shows the construction site of the CNNC Tianwan Tidal Flat Photovoltaic Demonstration Project in Lianyungang, in eastern China's Jiangsu province on September 15, 2026. (CN-STR / AFP)
This picture shows the construction site of the CNNC Tianwan Tidal Flat Photovoltaic Demonstration Project in Lianyungang, in eastern China's Jiangsu province on September 15, 2026. (CN-STR / AFP)

China's fossil-fueled power generation fell 4.3% in August from a year earlier, figures from the National Bureau of Statistics showed on Tuesday, as rising hydropower, nuclear and renewable output cut into coal's share.

It was the second month in a row of declines for China's fossil-fueled or thermal power generation, which is mostly from coal with a small amount from natural gas.

"Power generation from coal and gas fell 4% in China in August, as solar and wind ‌covered all electricity ‌demand growth and hydropower and nuclear grew ‌as ⁠well," the Centre ⁠for Research on Energy and Clean Air co-founder Lauri Myllyvirta wrote in a LinkedIn post, adding that "wind power generation rebounded from the slump of the earlier months of the year."

Thermal electricity generation still rose 0.9% over the first eight months as a whole, dragged down by the earlier months ⁠of the year because of poor ‌wind speeds and maintenance at nuclear ‌units.

Hydropower volumes rose 2.8% in August and 7.8% over ‌the first eight months.

Nuclear power generation rose 9.4% ‌from a year earlier. Two new nuclear reactors, the Guangdong Taipingling nuclear power plant and unit 3 of the Changjiang nuclear power plant, started operations in August, according to state media. Over the first ‌eight months, it rose 1.6%.

China generated 943.8 billion kilowatt-hours (kWh) of power in August, down ⁠0.8% ⁠compared with the same period of last year, the statistics bureau figures also showed. However, the data reflects output from industrial enterprises with revenue above 20 million yuan ($2.98 million), so excludes some small-scale renewables and generally undercounts total power generation as well as wind and solar.

The data showed that solar and wind generation rose 10.3% and 7.9%, respectively, from a year earlier.

Over the first eight months as a whole, power generation reached 6.65 trillion kWh, up 2.4% compared with the same period of last year, the data showed.