Economic and Political Overview

flag Tunisia Tunisia: Economic and Political Overview

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Economic Outline

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 Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 48.5452.6454.6556.7057.23
GDP (Constant Prices, Annual % Change) 0.01.61.61.51.5
GDP per Capita (USD) 3,9674,2674,3964,5284,539
General Government Balance (in % of GDP) -4.1-1.9-0.30.10.4
General Government Gross Debt (in % of GDP) 82.483.784.385.187.3
Inflation Rate (%) 9.37.16.76.77.8
Unemployment Rate (% of the Labour Force) 16.40.00.00.00.0
Current Account (billions USD) -1.31-1.85-1.87-2.03-2.13
Current Account (in % of GDP) -2.7-3.5-3.4-3.6-3.7

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 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).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 13.9 34.2 51.9
Value Added (in % of GDP) 10.1 23.0 60.3
Value Added (Annual % Change) 2.0 -0.4 3.9

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

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Political Outline

Current Political Leaders
President: Kaïs Saïed (since 23 October 2019)
Prime Minister: Kamel Maddouri (since 8 August 2024)
Next Election Dates
Presidential: 2029
Assembly of the Representatives of the People: December 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 newly constituted council of regional representatives.
For the first time since the 2022 constitution, Tunisia held presidential elections on October 6, 2024. The Independent High Authority for Polls (ISIE) rejected a number of candidates, including President Kais Saied's principal rivals, and the majority of parties abstained from the polls. Contrary to the constitution, which prohibits appealing court rulings, Mondher Zenaidi, Abdellatif Mekki, and Imed Daïmi, who had been reinstated by the Administrative Court, were refused, leaving only Saied, Zouhair Maghzaoui, and Ayachi Zammel affirmed. The ISIE rejected the Administrative Court's order on September 14th to admit these candidates and the Assembly of the Representatives of the People responded by passing an amendment that gave the Court of Appeal of Tunis the court's authority. In the weeks leading up to the election, Zammel was imprisoned and sentenced to over thirteen years for false sponsorship, a move seen by many as judicial harassment to eliminate his candidacy, also considering that similar difficulties were encountered by other contenders as well. Saied ultimately prevailed with 91% of the vote, despite the lowest voter turnout since the revolution (just under 29%). On October 21, he was sworn in for a second term.
Main Political Parties

In 2022, President Kais Saied implemented a decree prohibiting political parties from participating in legislative elections. This move significantly altered the political environment, leading to a notable decline in the influence of traditional political parties. Consequently, many established parties have experienced a reduction in their political presence.

Dominant political parties:

  • Ennahda: moderate Islamist party that has historically been a significant political force in Tunisia
  • Nidaa Tounes: secular, modernist party with a focus on security and national unity.

Other noteworthy parties include:

  • Popular Front: leftist coalition formed by the fusion of socialist, progressive, green, and Arab nationalist parties
  • Afek Tounes: center-right, secular, and liberal party
  • Tahya Tounes: secular, liberal, and Bourguibist party
  • Machrouu Tounes: big-tent secularist party.
Type of State
After the fall of President Zine El Abidine Ben Ali in 2011, Tunisia ratified a new Constitution on 26 January 2014, establishing it as a free, sovereign, and independent state. It adopted a parliamentary republic model with a legal system based on the French civil code and Islamic law in personal status matters. Islam is the official religion, and power is grounded in the sovereignty of the people and the separation of powers.
In 2022, a referendum led to a new constitution that shifted Tunisia to a presidential system, granting the president greater executive powers and centralizing authority.
Executive Power
The President of the Republic is the Head of State, elected for a five-year term through universal, free, direct, and secret suffrage, with an absolute majority of votes required. The President sets the general policies for national security, foreign relations, and defense, ensures the proper functioning of constitutional authorities, and maintains the continuity of the State. The President is limited to a four-term mandate. The President also nominates the Prime Minister, typically from the party or coalition with the most parliamentary seats, though this was subject to change after the 2022 constitutional reforms. The Prime Minister then appoints ministers, although the Ministers of Foreign Affairs and Defense must be appointed with the President's agreement.

Following the 2022 constitutional referendum, the President’s powers were significantly increased. The President now has the authority to appoint the Prime Minister and all government members without parliamentary approval and can dismiss them unilaterally. The President is also protected from censure unless a two-thirds majority in Parliament agrees.

Legislative Power
The people exercise legislative power through a representative assembly, the Assembly of the Representatives of the People, or by referendum. The Assembly currently consists of 161 deputies elected by universal direct suffrage for a five-year term.
The 2022 Constitution created a second chamber called the Council of Regions and Districts. Its members are indirectly elected by regional and district councils, not by universal suffrage (Article 81). Overall, the new constitution reduces the powers of the parliament. While it can still draft and enact laws, it can only pass a motion of no confidence in the government with a two-thirds majority in both chambers.
 

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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Latest Update: February 2025