Until the suicide of a young college graduate turned street vendor set off unrest that toppled the government, Tunisia was the poster boy for economic development in the Arab world and a favorite of foreign investors. Now the model looks like it is in tatters.
With economic policies that created a large educated middle class and a competitive, export-oriented economy, Tunisia was in many ways unique in the Arab world. But as Egypt, Jordan and Yemen struggle to contain their own mass protests, the solution of market-oriented reforms and the creation of a middle class urged by experts and international organization may seem unappealing.
“Just growing isn’t good enough. You have to grow and meet demands of a middle class and well educated population. That’s where they fell down,” Daniel Broby, chief investment officer at Silk Invest, told The Media Line.
Tunisia’s economy grew by more than 5% annually in 2006 and 2007, according to the International Monetary Fund. Even during the global recession, which hit its European trade partners hard, real gross domestic product continued to expand and was set to resume its 5%-plus pace starting to 2012. It was a favorite of foreign investors and international institutions like the World Economic Forum IMF promoting economic reform and efficiency. The Tunisian Stock Exchange rallied 20% last year and valuations for companies were above the average for emerging markets.
Tunisia’s glaring economic failure was in creating jobs. The unemployment rate hovered at about 13% even before the global recession set in and the rate of youth unemployment may be as high as 30%. The anger and frustration that resulted had no legal or political means to express itself to President Zine Al-Abidine Ben Ali’s regime.
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