On the international level, the gradual and virtually general easing of inflation continued albeit at a relatively slow level. Resilience in demand and recent recovery in international prices should weigh on the future trajectory of inflation, thus hindering the disinflationary process. In the light of recent decisions taken by major central banks, like the Federal Reserve and the European Central Bank, the entry into a phase of monetary easing does not appear imminent until signs of a sustained drop of inflation are confirmed.

 

On the national level, the latest available economic indicators reveal a certain resilience in the economic activity, excluding the agricultural sector, over the last quarter of 2023. The dynamism of external-oriented sector continued albeit at a less sustained pace than previously.

The gradual easing of domestic demand continued, leading to a slower growth pace of imports and an easing of pressures on the trade and current balances. This has supported the ongoing deceleration of inflation.

Concerning the external sector, the current balance posted a deficit of 4,058 MTD or 2.6% of GDP throughout 2023, against -12,451 MTD or 8.7% of GDP, a year before, corresponding to the lowest level recorded since 2007. The shrinking of the trade deficit (FOB-CIF) to 17.1 billion dinars, in 2023, against   25.2 billion in 2022, and the improvement in the balance of services’ surplus (+6 billion dinars against +5.4 billion dinars in 2022) favored the important reduction of the current deficit.

 

At end of January 2024, foreign exchange reserves amounted to 25.9 billion dinars (or 118 days of import) against 22.4 billion and 97 days a year before.

In terms of consumer prices, inflation rate, which started a downward trend in March 2023, closed for the year at 8.1% (in annual shift) against 10.1% in December 2022, corresponding to a 2-percentage point decline. This trend bears the mark of deceleration of core inflation “excluding foodstuff and products at regulated prices” (8.5% vs. 9.3%) as well as two other components, namely, regulated products (3.9% vs. 7.6% in December 2022) and prices of fresh foodstuff (13.3% vs. 18.1%).

The outlook for consumer prices suggests an ongoing easing of inflation, averaging around 7.3% in 2024, compared with 9.3% in 2023. However, the future trajectory of inflation remains surrounded by upside risks that could derive from a more significant rise in international prices, highly dependent on the evolution of geopolitical context, worsening water stress or increased pressure on public finances.

 

The Board examined the bill authorizing the Central Bank of Tunisia to grant facilities to the General Treasury of Tunisia. It emphasized the importance for the Central Bank of Tunisia, mandated to ensure price stability, to remain vigilant as regards potential repercussions of such financing.

The Board stressed the importance of ensuring macroeconomic and financial stability in order to return to sustainable growth, requiring the implementation of necessary reforms.

The Board considers that the key rate’s current level would, all things being equal, support the deceleration of inflation in the upcoming period. It decided to keep the Central Bank of Tunisia’s key rate unchanged at 8%.