In March 2020, Tunisia, a country located in the Maghreb region of Northern Africa, went into lockdown like the rest of the world because of the spread of the Coronavirus. The lockdown impacted Tunisia’s economy, jobs, households and agriculture. The government has implemented policies to mitigate COVID-19’s impact on the economy and society in Tunisia, but it did not soften the negative effects.
COVID-19’s impact on Tunisia’s economy has negatively affected its important sources of income. This negative impact on the economy also affected the livelihood of Tunisians, who lost their jobs and fell into poverty. Although the COVID-19 pandemic impacted the whole of Tunisia’s economy, the following examines only the critical aspects of Tunisia’s economy that experienced a decline during the pandemic.
Gross Domestic Product (GDP): During the pandemic, Tunisia’s GDP declined by 8.6%. Tunisia’s budget deficit contributed to 10.2% of the GDP decline. Furthermore, the public debt that Tunisia owes made up 87.6% of the decline in GDP. COVID-19’s impact on Tunisia’s GDP led to a 21% increase in the poverty rate, especially within rural areas in the northwest and southwest of the country.
Tourism: By the time Tunisia completely locked down in April 2020, the tourism sector experienced a steep decline of 80%. This resulted in the prediction of the closing of 60% of hotels in the summer of 2020, which is vital to the tourism sector. As a result of the decline in the tourism sector, it lost an estimated 400,000 jobs.
Retail: COVID-19’s impact on Tunisia resulted in the closure of businesses because of the lockdowns. As a result, the retail sector experienced an approximately 62% loss in revenue, according to the IFPRI report. As for jobs, the retail sector has experienced a -2.4% decrease in employment.
Agriculture: Agriculture is vital to Tunisia’s economy and international trade. The agricultural sector has experienced a 16.2% decline in revenue, IFPRI reported. Specifically, Tunisia’s export of fresh produce to European countries has fallen by 80%. As a result of COVID-19’s impact on Tunisia’s agricultural sector, agriculture jobs declined by 145,000.
Impact of Unemployment on Poverty
Similar to what happened in many countries during the pandemic, COVID-19 has caused many Tunisian businesses to lay off their workers. This increased the overall unemployment rate to 15% during the first quarter of 2020, and then up to 17.8% during the first quarter of 2021, according to Carnegie Endowment for International Peace. Rural regions, specifically the northwestern and southern parts of Tunisia experienced the highest increase in poverty and unemployment compared to the urban areas.
The northwest region has a 26% of unemployment and the southern region has a 21% of unemployment. College graduates make up 56% of the unemployed and in poverty. On the other hand, large cities and coastal areas in Tunisia have lower rates of poverty and unemployment. For example, Tunis has a 4.6% poverty rate and Ben Arous has a 5.6%, Carnegie Endowment for International Peace reports.
National Level: Due to a decline in output and production as a result of the lockdown, income on the national level fell by 8.6% within three months. That is an increase from the 5.7% decline within two months. Tunisians working in manufacturing and retail experienced the largest decline in income at 1.7%, according to the IFPRI report.
Urban Level: On average, urban households will experience an 8.9% decline in income. The income of urban poor households, in particular, will drop by 176 Tunisian Dinar. However, the non-poor urban income had a larger decline by 439 Tunisian Dinar.
Rural Level: According to the IFPRI report, the rural household income declined by 7.8%. The rural poor income declined by 201 Tunisian Dinar. On the other hand, the non-poor rural income declined by 354 Tunisian Dinar.
In response to these national challenges, the Tunisian government has promised to implement several policies that aim to address these issues. In March 2021, the government announced that they will relax the bank loan-to-deposit ratios by providing 500 million Tunisian Dinars at a 2% interest rate to struggling hotels. By the end of June, the government has given grants to 460,000 workers who are most likely to lose their jobs. Also by the end of June, the government distributed 300,000 support packages to vulnerable groups.
However, COVID-19’s impact on Tunisia highlighted the bureaucratic issues of its government. In fact, some of the policies that the government proposed to alleviate the impact of COVID-19 did not undergo implementation because of administrative impediments. Therefore, COVID-19’s impact on Tunisia will likely continue for years as long as implementation issues persist.
– Abdullah Dowaihy