Tunisian economy may suffer a downturn due to the political clashes between the goverment and the citizens. (photo: Reuters)
The current political situation in Tunis will affect the economic atmosphere, especially as its economy is heavily weighted towards the service sector which constitutes 40 per cent of the country's GDP, according to a report released by Barclays Capital. The report projected a diminishing of Foreign Direct Investment (FDI) flowing into Tunis, plus an increased budget deficit as the government is expected to increase its spending on infrastructure.
The tourism sector will suffer the biggest losses resulting from the recent events, as it represents about 8 per cent of Tunisia's GDP, said Alia Moubayed, head of the research department at Barclays Capital, according to Al Arabyia.
Foreign investment, especially European, finances the deficit in the Tunisian trade balance, where any delay will result in financing complications.