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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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Saudi Inflation Holds Steady in May as Rents Remain Key Driver

Aerial photo of the Saudi capital Riyadh (SPA) 
Aerial photo of the Saudi capital Riyadh (SPA) 
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Saudi Inflation Holds Steady in May as Rents Remain Key Driver

Aerial photo of the Saudi capital Riyadh (SPA) 
Aerial photo of the Saudi capital Riyadh (SPA) 

Saudi Arabia’s annual inflation rate remained stable at 2.2 percent in May 2025, maintaining a pace close to the 2.3 percent recorded in April. The continued stability in prices signals a relative balance in inflationary pressures, despite ongoing increases in housing costs.

This resilience comes amid global economic volatility, reflecting the effectiveness of Saudi Arabia’s fiscal and monetary policies, particularly in controlling energy and rental prices. The monthly Consumer Price Index (CPI) saw a slight uptick of just 0.1 percent.

According to the General Authority for Statistics (GASTAT), the annual inflation rate for May was driven primarily by rising housing-related costs. Prices in the housing, water, electricity, gas, and fuel sector increased by 6.8 percent compared to the same period last year. Food and beverage prices climbed by 1.6 percent, while personal goods and services saw a 4 percent rise.

Residential rents remained the most significant contributor to inflation, continuing their upward trend and exerting substantial influence on the general index. Despite this, the Kingdom’s inflation rate remains among the lowest in the G20.

Commenting on the data, Dr. Abdullah Al-Jassar, a member of the Saudi Association for Energy Economics, told Asharq Al-Awsat that Saudi Arabia’s inflation levels remain comparatively low on a global scale. He said the current rate reflects the flexibility and discipline of the national economy, noting that price increases have been modest and largely under control.

Al-Jassar attributed this to effective government policies that have helped shield both the market and consumers from external shocks.

He emphasized that the inflation observed is a result of real economic activity rather than external disruptions or internal imbalances. One of the most effective tools in curbing inflation, he said, has been the government’s decision to stabilize local energy prices, even as global oil prices surged. Since fuel plays a crucial role in the production, transport, and distribution of goods and services, this policy has prevented cost increases from spilling over into other sectors such as food, construction, and housing.

Al-Jassar described this approach as a “smart policy” that successfully absorbed global inflationary shocks before they reached the end consumer.

Although residential rents jumped 8.1 percent year-on-year, he noted that the rise was gradual and primarily driven by strong demand and limited supply. He also pointed out that the Saudi riyal’s peg to the US dollar has helped protect the economy from imported inflation and reduce the cost of importing goods.

Increased competition, tighter price monitoring, and the growing presence of e-commerce were also cited as factors contributing to market stability and limiting price manipulation across various sectors.

Looking ahead, Al-Jassar suggested inflation could see a slight increase in the second half of 2025, potentially rising to between 2.5 and 3 percent. He attributed this potential uptick to seasonal factors or changes in global commodity prices. Additionally, if the US Federal Reserve moves to cut interest rates, this could lead to looser monetary policy in Saudi Arabia, boosting liquidity and consumption—factors that might put upward pressure on prices. However, he stressed that there are currently no signs of any sharp or unexpected inflationary surges.

In April 2025, the inflation rate stood at 2.3 percent, also led by a 6.8 percent rise in housing and related costs. Food and beverages saw a 2.2 percent increase, while personal goods and services were up 3.5 percent.

Month-on-month data showed that while May’s CPI rose by just 0.1 percent, residential rents continued to rise, helping push housing-related prices up by 0.3 percent. Actual rents for residences alone increased by 0.4 percent. Food and beverages inched up by 0.1 percent, while personal goods and services rose by 0.5 percent. Tobacco prices edged up by 0.2 percent.