Tunisia: Economic and Political Overview

Economic Overview

Tunisia was deeply impacted by the Jasmine Revolution of 2011 that ousted President Zine El Abidine Ben Ali, and the country has never recovered economically. The situation was exacerbated by the health crisis triggered by the COVID-19 pandemic and by the political crises that the country has been experiencing in recent years. According to IMF estimates, economic growth stood at 1.3% in 2023 (from 2.5% one year earlier), due to the significant decline in rain-fed wheat production caused by insufficient rainfall. In 2024, growth will continue to face limitations due to elevated sovereign risk affecting the business environment and investor confidence, along with high inflation. Additionally, the expanding crowding-out effect on the private sector from the government's substantial financing requirements will contribute to these constraints. For the year as a whole, the IMF forecasts growth at 1.9%, with an acceleration to 2.3% in 2025.

Tunisia received financial assistance from several international organizations, such as the African Development Bank, the IMF, and the European Union (which disbursed EUR 600 million in loans under the Macro-Financial Assistance emergency support programme). The country also reached a staff-level agreement on a 4-year USD 1.9 billion Extended Fund Facility (EFF) programme with the IMF. The 2023 budget has been amended by the government, resulting in a revised projected deficit of 6.8% of GDP (including grants), up from the initial target of 5%, following a 7.3% deficit in 2022. The increased deficit primarily stems from greater subsidies and transfers to state-owned enterprises and a higher debt cost compared to the initial budget. Over the forecast horizon, the deficit is expected to gradually decrease (4% this year and 3.2% in 2025 – IMF). Meanwhile, the debt-to-GDP ratio decreased to 77.8% (from 79.8% one year earlier) and is expected to increase marginally in 2024, to 77.1% as per the IMF forecast. However, the majority of the high external debt is public or public-guaranteed, which may cause doubts about the country’s ability to service its debt. Inflationary pressures increased significantly and should remain high in the short term (9.4% in 2023 and 9.8% in 2024 as per the IMF). Among the policies necessary to restore macroeconomic stability the IMF points to a conscientious reduction of the fiscal deficit through equitable taxation reform, strict control over the public sector wage bill, better-targeted subsidies, and deep reforms of state-owned enterprises.

Tunisia is afflicted by increasing economic disparities that favour its coastal regions, which account for more than 80% of urban areas and 90% of overall employment. The highest poverty rates are concentrated in rural areas, especially those in the northwest and southwest of the country (often exceeding 33%). Contrarily, the greater Tunis area shows the lowest values (Carnegie). According to the latest figures from the National Statistics Institute (INS), as of Q2/2023, the unemployment rate stood at 15.6%; nevertheless, youth unemployment – at 38.1% - was particularly high. By gender, the unemployment rate remains significantly higher for women (21.1%) than for men (13.2%).

Main Sectors of Industry

Agriculture is a key sector of the Tunisian economy, accounting for 9.8% of GDP and employing 14% of the workforce (World Bank, latest data available). The country has 9.7 million ha of agricultural land, equivalent to 62% of its total land area (FAO). An improvement in production methods in recent years has allowed the sector to develop and modernise (cultivation of olive trees, fruit trees and palm trees) while enabling the country to reach a level of food sufficiency. Organic farming is also booming, with Tunisia being one of the most productive countries in Africa. Olive oil accounts for the largest share of agricultural exports, followed by dates, olives and fresh fruits. According to the latest figures from the National Observatory for Agriculture, Tunisian food exports experienced a remarkable increase of 21.3% in 2023, while imports saw a decrease of 6.2%. This was primarily attributed to the rise in olive oil exports (+52.4%) and the decline in imports of cereals (-11.2%) and vegetable oils (-40%).

Industry represents 23.3% of the GDP and employs 34% of the active population. The country's industrial sectors are predominantly export-oriented. Among the sectors in decline, are the leather and shoe industry, paper, cardboard, plastic, and wood. The chemicals, textiles and clothing sectors have been growing in recent years; however, the economic crisis triggered by the Covid-19 pandemic impacted especially the textile and clothing sector and the mechanical and electrical engineering sub-sectors, which are still recovering. Overall, the manufacturing sector is estimated to account for 15% of GDP (World Bank) and is strongly connected to European production chains. According to the latest figures from the National Statistical Institute, the manufacturing production index stood at 105.3 in 2022 (2010=100).

The local economy is largely orientated towards services, which account for 60.3% of the GDP, including the booming sectors of ICT (information and communication technologies) and tourism. Professional training and research are both rising sectors. The services sector as a whole employs 52% of the country's workforce. The tourism industry is also important to the country’s economy: after suffering from the international restrictions imposed during the COVID-19 pandemic, it showed signs of recovery in 2022, and in 2023 the country welcomed 8.8 million visitors, marking a 49.3% increase in one year and above the level recorded before the Covid pandemic. As of December 10, 2023, tourism revenue reached TND 6.7 billion (approximately eur 2 billion).

Source: World Bank, Latest data available.

Indicator of Economic Freedom

Score:

56,6/100

World Rank:

119

Regional Rank:

10

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

Business environment ranking

Score:

5.12/10

World Rank:

69/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

Sources of General Economic Information

Ministries

Ministry of Trade

Statistical Office

National Statistics Institute (INS)

Central Bank

Central Bank of Tunisia

Stock Exchange

Tunis Stock Exchange

Other Useful Resources

The Economist - Tunisia
Chamber of Commerce and Industry

Main Online Newspapers

Le Temps (in French)
La Presse (in French)
As-Sabah (in Arabic)

Economic Portals

Tunisia news

Political Outline

Current Political Leaders

President: Kaïs Saïed (since 23 October 2019)
Prime Minister: Ahmed Hachani (since 1 August 2023)

Next Election Dates

Presidential: 2024
Assembly of the Representatives of the People: 2027

Current Political Context

Tunisia is characterised by a very unstable political context. In October 2019, Kais Saied won the presidential elections over Nabil Karoui and seized exceptional powers in the context of social unrest due to the worsening economic situation caused by the COVID-19 pandemic. In September, Saied suspended the legislature and secured public backing in a July 25th 2022 referendum for a new constitution that weakens the parliament's powers in favour of the presidency. In fact, the new government does not need the approval of the parliament, and cannot be censored without a two-thirds majority of both parliament and a council of regional representatives, whose structure has yet to be defined.
One year after President Saied officially dissolved the Assembly, the new parliament convened for the first time in March 2023. This marked the first parliamentary session since the military sealed the previous assembly in 2021 and the elections held in December 2022 and January 2023. These elections saw significant boycotts, with only 11% of eligible voters participating. The session faced stringent limitations, permitting only journalists from the state broadcaster and the official state news agency to cover the events of the inaugural session.

Main Political Parties

There are many political parties in Tunisia. In 2022, President Saied issued a decree prohibiting the involvement of political parties in legislative elections. Despite remaining a presence in Tunisian political affairs, these parties have experienced a notable decline in influence.The two dominant parties are:
- Ennahda: moderate Islamist
- Nidaa Tounes: secular, modernist, concerned with security

Other noteworthy parties:
- Popular Front: leftist; formed by fusion between socialist, progressive, green, and Arab nationalist parties
- Afek Tounes: centre-right, secular, liberal
- Tahya Tounes: secular, liberal, bourguibis
- Machrouu Tounes: big tent secularist

Type of State

After the fall of President Zine El Abidine Ben Ali in 2011 and the move towards a more democratic Tunisia, a new Constitution was ratified on 10 February 2014. According to the terms of the Constitution, Tunisia is a free State, sovereign and independent. It is a parliamentary republic, with a legal system based on the French civil code and Islamic law. Islam is the official religion. The power instituted by the Constitution is founded on the sovereignty of the people and the separation of powers.
Nevertheless, following the new 2022 constitution, Tunisia switched from the hybrid parliamentary-presidential system under its postrevolutionary constitution to a presidential system.

Executive Power

The President of the Republic is the Head of State. The President is elected for five years by universal, free, direct and secret suffrage, and by an absolute majority of the votes cast. The President creates general policies regarding national security, international relations, and defence. He sees to the regular functioning of the constitutional public authorities and ensures the continuity of the State. The President is limited to a four-term mandate. The President nominates the Prime Minister, who is the Head of Government. The Prime Minister is normally selected from the members of the party or electoral coalition that obtained the highest number of seats in the parliamentary elections. The Prime Minister appoints the ministers and Secretaries of State; however, the Ministers of Foreign Affairs and Defence are designated with the accord of the President.
Following a 2022 constitutional referendum, the President has now more powers since he is in charge of appointing the prime minister and the government members, without the need to seek the approval of the parliament, and cannot be censored without a two-thirds majority of both parliament and a council of regional representatives. Furthermore, the president can dismiss the members of the government unilaterally.

Legislative Power

The people exercise legislative power through a representative assembly, the Assembly of the Representatives of the People, or by referendum. The Assembly is composed of 217 deputies elected by universal, free, direct and secret suffrage for a five-year term.
The new 2022 constitution created a second chamber of parliament called the Council of Regions and Districts. It consists of people elected by members of the regional and district councils instead of by universal suffrage (art. 81). Overall, the new constitution weakens the powers of the parliament, which can still draft and enact laws but can only pass a motion of no confidence in the government with a two-thirds majority.

Indicator of Freedom of the Press

World Rank:

73/180

Indicator of Political Freedom

Ranking:

Free

Political Freedom:

2/7

Civil Liberties:

3/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Tunisia please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.