TUNISIA – Tunisia’s olive oil exports have nearly doubled, reaching nearly US$1 billion in just five months, significantly aiding the country’s efforts to reduce its current account deficit.
Tunisia stands as the world’s leading exporter of olive oil outside the EU, and with the current global uncertainties over supply, the country is poised to benefit significantly.
The surge in olive oil exports has not only bolstered Tunisia’s economic standing but also helped narrow the deficit to a mere 2.3 percent of GDP in 2023, down from a staggering 8.5 percent the previous year.
This significant improvement, translating to around $3 billion, should instill a sense of hope and reassurance about the country’s financial stability.
This improvement is largely attributed to a substantial increase in olive oil exports, making Tunisia the second largest global producer, only behind Spain.
From November 2023 to March 2024, Tunisia’s olive oil export earnings soared to nearly TND2.9 billion (US$923 million), marking an 83 percent increase compared to the same period a year earlier.
Overall, 2023 saw total olive oil revenues hit a record US$1.3 billion. According to the International Monetary Fund, the global price of olive oil, which peaked at $10,281 per metric tonne in January, slightly declined to $9,908 by the end of March.
However, despite these impressive figures, economic expert James Swanston from Capital Economics warns that the increased revenues merely “paint over the cracks” of Tunisia’s deeper financial issues.
“Sovereign dollar bond spreads have narrowed sharply this year, but we still think that a sovereign default is more likely than not,” Swanston stated.
He attributes the recent revenue surge to reduced production in other olive oil-producing countries due to drought and extreme heat waves rather than a long-term sustainable improvement in Tunisia’s economy.
In March, the EU granted Tunisia €150 million (US$163 million) to support economic reforms and fiscal stability, while the World Bank approved loans totaling $520 million to address food security challenges. Additionally, Saudi Arabia provided a US$500 million financial assistance package last year.
Despite these international aids, negotiations between Tunisia and the IMF for a nearly US$2 billion loan have stalled since October, with President Kais Saied’s government refusing the proposed terms.
Looking forward, Tunisia’s olive industry is optimistic about the 2023/2024 marketing campaign, expected to produce 200,000 tonnes of olive oil starting in November, an 11 percent increase from the previous year’s 180,000 tonnes.
This projection is based on favorable climatic conditions and successful pest and disease control efforts, which treated 727,000 olive trees.
With approximately 2 million hectares dedicated to olive orchards and over 96 million trees, Tunisia’s Sfax region remains the main production hub, accounting for 33 percent of the plantations.
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