Economic and Political Overview

flag Tunisia Tunisia: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response

 

Economic Outline

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

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 2.2% in 2022, as the war in Ukraine and rising international commodity prices worsened the existing vulnerabilities of Tunisia’s economy, contributing to a sharp increase in the trade deficit. For 2023, the IMF expects growth to further decelerate to 1.6%, before picking up marginally in 2024 (2.1%).

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). In October 2022, the IMF and the Tunisian authorities have reached a staff-level agreement to support Tunisia's economic policies with a 48-month arrangement under the Extended Fund Facility of about USD 1.9 billion, in an effort to restore Tunisia’s external and fiscal stability. In fact, the country's public finances have suffered in recent years, with the government deficit reaching 6.8% of GDP in 2022 also due to subsidy spending for energy and food (that accounted for 2.8% and 0.4% of GDP respectively, according to the World Bank). Similarly, the debt-to-GDP ratio rose to 88.8% (from 81.8% one year earlier) and is expected to increase marginally in 2023, to 89.2% as per the IMF forecast. 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, mainly from global markets and higher administered prices, resulting in an overall rate of 8.1% in 2022. The Central Bank of Tunisia raised its policy rate by 75 basis points by the end of the year, to 8%, in its third increase of 2022; nevertheless, the IMF expects the inflation rate to remain high over the forecast horizon, at 8.5% this year and 7.9% in 2024. The pressure on the dinar against the dollar increased but the level of foreign exchange reserves has remained stable. 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 Q3/2022, the unemployment rate stood at 15.3%; nevertheless, youth unemployment – at 37.8% - was particularly high.

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 42.5446.6946.6049.8251.53
GDP (Constant Prices, Annual % Change) -8.84.42.51.31.9
GDP per Capita (USD) 3,5743,8853,8424,0724,177
General Government Balance (in % of GDP) -7.2-6.5-7.2-4.6-3.8
General Government Gross Debt (in % of GDP) 77.679.979.480.079.1
Inflation Rate (%) 5.65.78.310.99.5
Unemployment Rate (% of the Labour Force) 17.416.20.00.00.0
Current Account (billions USD) -2.51-2.78-3.98-3.55-2.92
Current Account (in % of GDP) -5.9-6.0-8.6-7.1-5.7

Source: IMF – World Economic Outlook Database, Latest data available.

Note : (E) Estimated data

 

Main Sectors of Industry

Agriculture is a key sector of the Tunisian economy, accounting for 10.1% 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, the value added of the agricultural sector increased by 2% year-on-year in the second quarter of 2022, following a 3.3% increase recorded in the first quarter.

Industry represents 23.1% of the GDP and employs 33% of the active population. The country's industrial sectors are predominantly export-oriented. Among sectors in decline, there are the leather and shoe industry, paper, cardboard, plastic, and wood. The chemicals and textiles and clothing sectors had 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 14% of GDP (World Bank). According to the latest figures from the National Statistical Institute, in Q3/2022, industrial production fell by 1.2% compared to the previous quarter, due to the decline recorded in the manufacturing (-0.5%) and in the mining and quarrying industries (-4.8%). Production was also down in the energy sector (-3%), the agricultural and food industries (-4.6%), mining (-15.9%), and the oil refining sector (-7.5%).

The local economy is largely orientated towards services, which account for 60.1% 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 53% 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 when Tunisia received 6.12 million tourists, marking a sharp increase of 159% compared to the previous year. Nevertheless, tourist arrivals were still 32% lower than in 2019, when the country welcomed a record 9.43 million tourists (data by the National Tourism Office).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 13.8 33.5 52.8
Value Added (in % of GDP) 10.1 23.1 60.1
Value Added (Annual % Change) -2.5 8.6 4.0

Source: World Bank, Latest data available.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

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

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
5.12/10
World Rank:
69/82

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

 

Country Risk

See the country risk analysis provided by Coface.

 

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Political Outline

Current Political Leaders
President: Kaïs Saïed (since 23 October 2019)
Prime Minister: Najla Bouden Romdhane (since 11 October 2021)
Next Election Dates
Presidential: 2024
Assembly of the Representatives of the People: December 2024
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. The first round of the parliamentary elections that took place in December 2022 saw just 11.2% of registered voters take part, the lowest turnout of any national vote since the 2011 revolt that overthrew Zine El Abidine Ben Ali. Most political parties have been sidelined by a system that bans candidates from declaring allegiance to a political grouping and called for a boycott of the elections, whose second round should take place at the end of January 2023.
Main Political Parties
There are hundreds political parties. The two dominant parties:
- 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 in regard to 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

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
73/180
 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

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

 

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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.

 

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Latest Update: September 2023