Over the past 13 years, Tunisia has demonstrated relatively low growth rates for developing countries, which is caused by a series of socio-economic shocks.
The dynamics of real GDP in 2011-2019 slowed significantly compared to the previous decade (2000-2010) due to the revolution of 2011 and the subsequent tightening of state control over economic activity, as well as a decrease in the inflow of foreign direct investment. The COVID-19 pandemic has also had a negative impact on the socio-economic development of Tunisia — the country's real GDP decreased by 8.6% in 2020.
The recovery growth of 4.6% in 2021 was replaced by a more moderate value of 2.6% in 2022. In 2023, the growth rate of Tunisian real GDP decreased to 0.4%. The slowdown in the dynamics of economic development is due to one of the strongest droughts in the last 50 years, which led to a significant decrease in agricultural productivity (a key sector of the country's economy). In addition, the slowdown in real GDP growth is due to a decrease in consumer demand, which is observed against the background of record high inflation (9.3%) and unemployment (17.7%), especially noticeable among young people.
The instability of the Tunisian financial system, including a high level of public debt and a negative foreign trade balance, causes dependence on government external borrowings (including in specialized financial institutions: the World Bank, the IMF, the African Development Bank, the European Investment Bank, etc.). At the same time, ongoing negotiations on the provision of additional support from the IMF (in the amount of 1.9 billion US dollars for 48 months) has not yet led to a positive result.
Despite this circumstance, a default is not expected in Tunisia in the near future due to sufficient foreign exchange reserves.
One of the most stable and growing sectors of the Tunisian economy in 2023 was the service sector. The restoration of the tourist flow from abroad, the expansion of the number of hotel rooms, as well as the stable exchange rate of the Tunisian dinar stimulate the inflow of foreign currency into the country and, as a result, lead to a reduction in the current account deficit. Despite the fact that tourism development has still not reached the pre-pandemic level, the positive dynamics of the sector, as well as the recovery of other sectors of the economy after unsatisfactory indicators in 2023, allow us to predict higher real GDP growth rates in 2024, including due to the effect of a low base. According to IMF estimates, the Tunisian economy will grow by 1.9% in 2024.
By the end of 2023, Tunisia recorded a record inflation rate of 9.3% since the early 1980s. The continuing increase in consumer prices since 2022 is due to a significant depreciation of the national currency relative to the main currencies of international exchange and the concomitant rise in the cost of food imports, as well as the severe drought in 2023. The stabilization of key macroeconomic indicators and the projected change in weather conditions, according to the IMF, will slow down price growth to 7.4% in 2024. Meanwhile, despite the downward trend, the inflation rate in the country remains high, and the Central Bank of Tunisia continues to pursue a relatively tight monetary policy - the key rate since the beginning of 2023 is 8.0%.
