Tunisia’s GDP Growth Seen Slowing to 1% After Attacks

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Tourists Lay Flowers on a Beach in Sousse
Tourists lay flowers on the beach in memory of those killed by a gunman in Sousse. Photographer: Fethi Belaid/AFP via Getty Images

Two deadly militant attacks on tourists in Tunisia this year will probably inflict the worst damage on the nation’s economy since the 2011 revolt that ended Zine El Abidine Ben Ali’s autocratic rule.

Economic growth is expected to slow to 1 percent this year from 2.3 percent in 2014, Finance Minister Slim Chaker told Bloomberg on Saturday. That’s the slowest pace since 2011, according to International Monetary Fund data. The government will try to keep the budget deficit at 5 percent of gross domestic product, the minister said.

Tunisian President Beji Caid Essebsi declared a 30-day state of emergency on July 4, about a week after a gunmen shot dead 38 tourists, mostly British, in the beach resort of Sousse. In March, militants carried out an attack on the Bardo National Museum in Tunis that killed more than 20 people.

“2015 is likely to be a difficult year for the Tunisian economy,” Emirates NBD PJSC, Dubai’s biggest bank, said in a research report published Monday. Tourism accounts for about 7 percent of Tunisia’s economic output, according to the IMF.

The attack in Sousse “will only do further damage to an industry that had not yet fully recovered from the events of 2011,” Emirates NBD economists Khatija Haque and Jean Paul Pigat wrote.

The yield on Tunisia’s $1 billion Eurobonds due in 2025 climbed 17 basis points last week, the most since the securities were sold in January, to 6.08 percent, according to data compiled by Bloomberg.

Militant Attacks

While Tunisia has escaped the worst of the unrest that swept parts of the Arab world since 2011, it has seen a surge in militant attacks by Islamists who the government said were trained in Libya.

The Sousse shooting “underscores the threat that insecurity poses to the near-term outlook,” HSBC Holdings Plc economists Simon Williams and Razan Nasser wrote in a report this month. A second attack “so close to the first is likely to deal an especially heavy blow to confidence, weighing on capital flows and the tourism industry,” they wrote.

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Security forces killed five leaders of the group behind recent attacks in an operation on Friday, Interior Minister Najem Gharsalli told reporters over the weekend.

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