TUNIS, June 29 (Reuters) – The European Bank for Reconstruction and Development (EBRD) said Tuesday it expects the Tunisian economy to grow 2.7% of GDP this year, but the recovery will be from a COVID -19 vaccination and economic reforms depend and the important tourism sector.

Tunisia had forecast 3.9% growth this year after shrinking 8.8% in 2020, but the rapid spread of the coronavirus suggests another bad tourist season as foreigners leave the country’s beaches.

Tunisia’s gross domestic product (GDP) shrank by 3% in the first quarter of 2021 compared to the previous year.

“The strength of the recovery will also depend on the pace of COVID-19 vaccination, which will allow the economy, including the tourism sector, to reopen,” the bank said.

She added that a strong and sustained recovery will depend on economic reforms, while fiscal tightening is likely to dampen the strength of an upswing.

Tunisia, which posted a budget deficit of 11.4% of economic output last year, has started talks with the International Monetary Fund about a financial aid package.

(Reporting by Tarek Amara; editing by Kirsten Donovan)