Tunisia

Economic Overview

The Republic of Tunisia has one of North Africa's most diversified and open economies. Historically, it has been lauded for its strong human development indicators and a significant industrial base integrated with European supply chains. However, since the 2011 revolution, the country has faced persistent macroeconomic challenges, including weak growth, high unemployment, and significant public debt. The 2025-2026 outlook is one of modest recovery, heavily dependent on the successful implementation of economic reforms, a revival of the tourism sector, and a stable political and social environment.

GDP Size & Growth Trajectory

Tunisia's economy has struggled to regain its pre-revolution momentum. Growth has been modest, hampered by political uncertainty and external shocks. After growing by an estimated 0.4% in 2023, the IMF projects a slight recovery, with real GDP growth forecast at 1.9% in 2024 and 2.0% in 2025. This slow recovery is supported by a rebound in tourism and exports, but remains insufficient to significantly reduce the country's high unemployment rate.

Sector Composition

• Services: This is the largest sector, contributing over 60% of GDP. It is driven by a strong tourism industry, along with trade, transportation, and a growing ICT sector.
• Industry: The industrial sector accounts for approximately 25% of GDP. A key strength is its manufacturing base, which is heavily oriented towards exports to Europe. This includes textiles and apparel, as well as higher-value-added products like automotive components and aerospace parts.
• Agriculture: This sector contributes around 10% of GDP but remains a vital source of employment. Tunisia is a major global producer and exporter of olive oil, and also produces dates, citrus fruits, and grains.

Inflation Trends

Inflation has been a persistent issue, eroding purchasing power and contributing to social tensions. After peaking, inflation has started to moderate, thanks to monetary tightening by the Central Bank of Tunisia (BCT). Inflation is expected to gradually decline but will remain a key policy challenge.

Fiscal & Monetary Policy Stance

• Monetary Policy: The BCT has maintained a tight monetary policy, raising its key interest rate to combat inflation.
• Fiscal Policy: The government is grappling with a large fiscal deficit and a high public debt burden. An ambitious reform program, including subsidy reform and improvements to the public sector, is under negotiation with the IMF, but its implementation has been slow due to social and political sensitivities.

Debt Sustainability Indicators

Public debt is a major vulnerability, having risen to over 80% of GDP. A large portion of this is external debt, making the country reliant on securing new external financing. A comprehensive financing package from the IMF is seen as critical to restoring macroeconomic stability and ensuring debt sustainability.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

Tunisia's market is characterized by its proximity to Europe and a relatively well-educated consumer base.

Population Size and Demographics

With a population of over 12 million, Tunisia has a moderately sized domestic market. A key challenge is its high youth unemployment rate, despite a well-educated population.

Urbanization and Consumer Hubs

The country is highly urbanized, with over 70% of the population living in cities. The capital, Tunis, is the dominant economic and political hub. Coastal cities like Sfax and Sousse are also important industrial and commercial centers.

Consumer Spending & Market Access

Consumer spending has been constrained by high inflation and weak economic growth. The formal retail sector is well-developed in major cities.

Business Environment

Tunisia has a long history of being a relatively easy place to do business in North Africa, with a strong legal framework and pro-business policies.

Ease of Doing Business & Regulatory Reforms

While the country has a generally favorable investment code, the pace of reform has slowed since 2011. Bureaucracy can be a challenge, but the government is working to digitize services and streamline processes through the Tunisian Investment Authority (TIA).

Company Registration Process

The process of starting a business involves registering with the one-stop-shop at the Agency for the Promotion of Industry and Innovation (APII) or the TIA. The process is relatively straightforward but can involve multiple administrative steps.

Tax Regime

• Corporate Income Tax (CIT): The standard rate is 15%, with different rates for certain sectors like financial services.
• Value Added Tax (VAT): The standard VAT rate is 19%.

The Investment Law provides various incentives, including tax exemptions and financial support for investments in priority sectors and regional development zones.

Political Stability & Governance

Tunisia's political landscape has been in a state of flux since it sparked the "Arab Spring" in 2011.

Political Environment

After a decade-long democratic transition, the country has seen a concentration of power in the presidency since 2021. While this has brought a degree of short-term stability, it has also created political uncertainty about the country's long-term democratic trajectory. Social tensions, driven by economic hardship, remain a risk.

Rule of Law & Investor Protection

Tunisia has a relatively strong and independent judiciary based on French civil law. The country has a framework for protecting foreign investment and is a signatory to international arbitration conventions.

Infrastructure Readiness

Tunisia has some of the best infrastructure in Africa, particularly in transport and logistics.

Transport and Logistics

• Ports: Tunisia has a network of commercial seaports, with the Port of Radès near Tunis being the main container and trade hub.
• Road Network: The country has a modern and extensive highway network connecting its major cities and economic zones.
• Airports: Tunis-Carthage International Airport is a major regional gateway.

Energy Sector

Tunisia is a net importer of energy, making it vulnerable to global price fluctuations. The government is strongly promoting investment in renewable energy, particularly solar and wind, to increase its energy independence. The country has excellent solar potential.

Sector-Specific Opportunities

1. Manufacturing (Automotive & Aerospace)

This is a key strength of the Tunisian economy. The country has a well-established ecosystem of companies manufacturing automotive parts (wiring harnesses, electronic components) and aerospace components for major European firms. Opportunities lie in expanding this supply chain and moving into higher-value-added assembly.

2. ICT and Business Process Outsourcing (BPO)

Leveraging its highly educated, multilingual (French, Arabic, often Italian) workforce and its proximity to Europe, Tunisia is an attractive destination for IT services, software development, and BPO for European companies.

3. Renewable Energy

The government's push for energy independence creates significant opportunities for investment in utility-scale solar and wind projects. The legal framework for independent power producers (IPPs) is in place, and there are active tenders for new projects.

4. Agribusiness (Olive Oil)

Tunisia is a world leader in olive oil production. Opportunities exist in modernizing production, improving quality, and developing branded, high-value olive oil products for the export market.

5. Tourism

As a traditional pillar of the economy, tourism continues to offer potential. While the mass-market beach tourism model is well-established, there are growing opportunities in higher-value segments like cultural tourism, medical tourism, and eco-tourism.