Economic and Political Overview

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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. In 2020, the already precarious situation was aggravated by the economic crisis caused by the Covid-19 pandemic, and the GDP contracted by -8.6% (IMF). According to IMF estimates, growth picked up to 3% in 2021, and should further increase to 3.3% in 2022 before slowing down to 2.5% in 2023. The ease of restrictions should stimulate domestic demand and tourism should start to recover (Focus Economics). However, the looming fiscal crisis, political instability and the apparition of new virus variants are downside risks (Focus Economics).

Tunisia’s economy has been severely hit by the Covid-19 outbreak, as tourism revenues dropped, private consumption fell and remittance inflows dried up. The country received financial support from the EU (EUR 700 million), the African Development Bank (EUR 60 million), as well as urgent medical assistance from numerous countries. This aid partly limited the drain on foreign exchange reserves, which represented 4 months of imports as of end-September 2021 (Coface). Public deficit reached an estimated -8.3% GDP in 2020, narrowed to -7.6% GDP in 2021, and is expected to remain high in 2022 (-7.1%) and 2023 (-7%) (IMF). Revenues should pick up while subsidies and wage bill cuts will decrease expenditures (Coface). Tunisia has covered its budget deficit thanks to loans coming from bilateral and multilateral donors, but in the absence of reforms no agreement was secured with the IMF. Public debt has increased to reach an estimated 90.2% GDP in 2021, and is expected to further widen to 92.7% GDP in 2022 and 95.2% GDP in 2023 (IMF). The majority of the high external debt being public or public-guaranteed debt, the country’s ability to service its debt can be questioned (Coface). At the end of 2021, growing tensions between President Kaïs Saïed and the main union over the question of austerity measures were exacerbating the risk of a sovereign default. The persistently high inflation, estimated at 5.7% in 2021 and forecast at 6.5% and 5.5% in 2022 and 2023 respectively (IMF) reflect sharp currency depreciations and is source of social tensions (Euler Hermes).

In this context, unemployment rose to an estimated 17.4% in 2020 (IMF) and was expected to exceed 18% in 2021 (Coface). To cope with rising food prices or to compensate for job losses, households drew on their savings, receiving aid or borrowing money from relatives and postponing the payment of their obligations. In 2020, extreme poverty - measured using the international poverty line of USD 1.90 per day - will still be less than 1%; however, poverty measured using the line of USD 3.20 per day will increase by about 1.3 percentage points, from 2.9% to 4.2% (World Bank, October 2020).

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 42.5246.8446.2846.0248.10
GDP (Constant Prices, Annual % Change) -8.73.32.21.62.1
GDP per Capita (USD) 3e3333
General Government Balance (in % of GDP) -7.3-6.2-6.8-5.5-4.0
General Government Gross Debt (in % of GDP) 82.881.888.889.287.1
Inflation Rate (%) 5.65.78.18.57.9
Unemployment Rate (% of the Labour Force) 17.416.20.00.00.0
Current Account (billions USD) -2.51-2.87-4.20-3.68-3.11
Current Account (in % of GDP) -5.9-6.1-9.1-8.0-6.5

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

Note: (e) Estimated Data

 

Main Sectors of Industry

Agriculture is a key sector of the Tunisian economy, accounting for 10.1% of the GDP and employing 14% of the workforce (World Bank, 2020). An improvement in production methods in the past 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 in agricultural exports, followed by dates, olives and fresh fruits. Agricultural and agri-food activities on the local market have been affected by the Covid-19 pandemic. The population significantly increased its stock levels, boosting demand for wheat products by 26% and causing major disruptions in distribution channels. Olive oil exports was one of the rare sectors not to have suffered from the crisis (Coface).

Industry represents 21.7% 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 leather and shoe industry, paper, cardboard, plastic, wood, food and construction materials. The chemicals and textiles and clothing sectors were growing until 2019. 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. Control measures and restrictions have amplified the drop in foreign demand, reducing exports of mechanical and electrical engineering and textiles by 27% by (year-on-year) mid-2020. Recurrent strikes affect the sector.

The local economy is largely orientated towards services, which account for 61% of the GDP, including the booming sectors of ICT (information and communication technologies) and tourism. Professional training and research are both rising sectors. The service sector employs 53% of the country's workforce. Tourism, which suffered from terrorist attacks that hit the Tunisian soil, recovered considerably in 2019 with international arrivals rising to 9.4 million (13.6% increase year-on-year). The Covid-19 pandemic strongly affected the tertiary sector. Tourism revenues fell by almost 30%, affected by the closure of international borders in March 2020. With the total lockdown in April 2020, all foreign tourist bookings were cancelled, with an estimated 80% drop in Tunisia's tourism sector. Transport is the second most severely impacted service sub-sector, with losses estimated at 60% in 2020.

 
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) 11.7 21.8 61.3
Value Added (Annual % Change) 4.5 -8.2 -10.5

Source: World Bank, Latest available data.

 

Find more information about your business sector on our service Market Reports.

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 four prime ministers were successively appointed then. Habib Jemli and his government were rejected by the Assembly in January 2020, Elyes Fakhfakh resigned in July 2020, and Hichem Mechichi was dismissed in July 2021 in the context of social unrest due to the worsening economic situation caused by the pandemic. Saied seized exceptional powers allowed under Tunisia's constitution to fire him and took over the executive power. In September, Saied suspended the legislature and in mid-December he announced that a constitutional referendum cementing the President’s power would be held in late July 2022. The president's roadmap provoked strong opposition from political parties. Tunisia faces periodic terrorist attacks, as illustrated by the June 2019 double attack on Tunis claimed by the Islamic State.
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 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.
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 regards 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 two-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.
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.
 

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

COVID-19 epidemic evolution

To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the disease in Tunisia, visit the official portal on COVID-19 of the Ministry of Health, which also provides data on the geographical distribution of the epidemic in the country.
For the international outlook you can consult the latest
situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.

Sanitary measures
To find out about the latest public health situation in Tunisia and the current sanitary measures in vigour, please consult the dedicated pages on the official portal on COVID-19 (in French). For further information visit the website of the Ministry of Health and the portal of the National Observatory of New and Emerging Diseases (ONMNE) on COVID-19.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions

For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Tunisian Customs Authority (in French and Arabic).
For a general overview of trade restrictions due to COVID-19 pandemic in the world, please consult the
International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the information on the economic recovery scheme put in place by the Tunisian government to address the impact of the COVID-19 pandemic on the national economy, please visit the website of the Ministry of Finance (in French and Arabic). For a summary in English of the economic and fiscal measures in vigour, consult the dedicated page from KPMG.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Tunisian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Tunisia in the
IMF’s Policy Tracker platform.

Support plan for businesses
For the information on the local business support scheme established by the Tunisian government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please visit the website of Invest in Tunisia and that of the Ministry of Industry (in French). To obtain more details on the support measures for businesses, consult the relevant BDO report.
For a general overview of international SME support policy responses to the COVID-19 outbreak 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.
Support plan for exporters
For the up-to-date information on possible support plans for exporters in Tunisia, if applicable, please consult the website of Invest in Tunisia, as well as that of the Ministry of Trade.
 

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Latest Update: November 2022