Tunisia: Economic and Political Overview
In this page: Economic Outline | Political Outline | COVID-19 Country Response
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 | 2019 | 2020 | 2021 (e) | 2022 (e) | 2023 (e) |
|---|---|---|---|---|---|
| GDP (billions USD) | 39.17e | 39.22e | 42.73 | 45.45 | 47.92 |
| GDP (Constant Prices, Annual % Change) | 1.0e | -8.6e | 3.0 | 3.3 | 2.5 |
| GDP per Capita (USD) | 3,324e | 3,295e | 3,556 | 3,748 | 3,916 |
| General Government Balance (in % of GDP) | -5.0 | -8.3e | -7.6 | -7.1 | -7.0 |
| General Government Gross Debt (in % of GDP) | 74.2 | 89.7e | 90.2 | 92.7 | 95.2 |
| Inflation Rate (%) | 6.7 | 5.6e | 5.7 | 6.5 | 5.5 |
| Unemployment Rate (% of the Labour Force) | 14.9 | 17.4e | 0.0 | 0.0 | 0.0 |
| Current Account (billions USD) | -3.29 | -2.67e | -3.13 | -3.82 | -3.82 |
| Current Account (in % of GDP) | -8.4 | -6.8e | -7.3 | -8.4 | -8.0 |
Source: IMF – World Economic Outlook Database, October 2021
Note: (e) Estimated Data
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.
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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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
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.).
Source: World Press Freedom Index, Reporters Without Borders
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.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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.
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.
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.
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