POLITICAL The political outlook for Tunisia appears stable. President Zine El-Abidine Ben Ali will remain in power and is not expected to face any major opposition. While there has been some social unrest towards the government over the rising cost of food and increased unemployment, the social environment is for the most part stable. ECONOMICAL Tunisia is attempting to position itself as a hub for aeronautical manufacturing. In 2008 foreign direct investment grew by 50%, and Tunisia will push for the same, if not higher, level of investment in 2009. In the short-term Tunisia’s banks will increase initiatives to provide financing to the private sector. GDP growth may slow to 2.5% in 2009 in concurrence with the EU’s economic situation. However, it should recover by 2010. It is expected that economic growth will average at 4.5% a year for the next five years. As international commodity prices level off in 2009-2010 Tunisia’s inflation rate should ease accordingly. The current account deficit will reach approximately 2% of GDP over the next three to five years owing to stagnate demand from the EU, which has offset the benefits of decreased oil prices. Tunisia will face growing competition in terms of exports from new EU accession countries as well as exporters from the Middle East and Asia. Tunisia’s government will stay on track with its structural reform, which includes fiscal consolidation and prudent public debt management. In order to increase employment and better living standards, the government has set an annual target of 6% for economic growth. This target will try to be achieved by such efforts as: increased investment in manufacturing, better private sector services, improved education system, and encouraging high-knowledge based industries.