Tunisia’s foreign trade deficit contracted 20% y/y to TND3.583bn ($1.86bn) in the first four months of the year on rising exports and falling imports, data from the statistics office showed on May 10. Exports grew 6.3% y/y to TND9.73bn, boosted by soaring food, mechanical and electrical appliances and other manufacturing industries foreign sales. This is good news for the government seeking to boost value-added exports, which in turn, should spur GDP growth in 2015.

Imports fell 6.0% y/y to TND13.31bn in January-April. The exports/imports ratio improved to 73.1% in January-April from 67.1% a year earlier.

Lower imports and consequently narrower CA gap will shore up Tunisia’s FX reserves in the near term. Soaring current transfers and remittances, coupled with narrowing trade gap, largely offset a mild decline in the services income, helping cut Tunisia’s chronic current account (CA) deficit by 23% y/y to TND1.54bn in the fourth quarter of 2014. The full year CA deficit reached 8.9% of GDP in 2014, according to the IMF latest estimates. The CA gap will narrow to 6.4% in 2015, the IMF forecasts.

Exports of food and agriculture products jumped 125.3% y/y at end-April amid soaring value-added oil olive sales abroad (up to TND928mn at end-April from just TND104.2mn the year before). The low prior-year base will keep boosting agriculture exports at least in the first half of 2015. The good news is that exports of mechanical and electrical appliances increased for the fourth straight month in April (up 3.6% y/y) on recovering EU demand after a period of stagnation.

Exports, however, were undermined by a 28.5% y/y drop in energy sales on falling oil prices, a 28.4% annual contraction in phosphates exports amid lower output and a 3.5% drop in sales of textiles.

Imports were dented by a 11.6% y/y drop in energy purchases amid declining crude oil prices despite rising local demand.

Imports of semi-finished goods grew 2.7% y/y and those of food grew 6.9% y/y in January-April.