Tunisia’s foreign trade deficit contracted 8.5% y/y to TND8.6bn ($4.4bn) in the first eight months of the year, mainly on falling imports as exports were virtually unchanged, data from the statistics office showed. Exports grew a marginal 0.2% y/y to TND18.35bn, underpinned by soaring food, mechanical and electrical appliances and other manufacturing industries foreign sales.

Imports fell 2.8% y/y to TND27bn in January-August. The exports/imports ratio improved to 68.1% over the period from 66.1% the year before.

Lower imports and consequently narrower CA gap will help keep Tunisia’s FX reserves relatively strong in the near term. Soaring current transfers and remittances, coupled with narrowing trade gap, largely offset a sharp decline in the services income amid sinking tourist arrivals, helping cut Tunisia’s chronic current account (CA) deficit. 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 121.3% y/y at end-August amid soaring value-added oil olive sales abroad (up to TND1.6bn at end-August from just TND203mn the year before). The low prior-year base will keep boosting agriculture exports at least in 2015. The good news is that exports of mechanical and electrical appliances also increased (up 2.5% y/y) on recovering EU demand after a period of stagnation.

Exports, however, were undermined by a 50% y/y drop in energy sales on falling oil prices, a 43% annual contraction in phosphates exports amid lower output and a 6.4% drop in sales of textiles.

Imports were dented by a 20.8% y/y drop in energy purchases amid declining crude oil prices despite rising local demand.