Tunisia’s economy is mounting a fragile comeback, fueled by a rebound in agriculture, construction, and tourism, according to a new World Bank report. However, the recovery is threatened by deep-seated structural problems and a tight external financing situation.
The World Bank’s latest Economic Update for Tunisia, titled “Strengthening Social Safety Nets for Increased Efficiency and Equity,” reveals that the country’s Real GDP grew by 2.4% in the first nine months of 2025. This marks a significant step forward after years of sluggish growth compounded by the aftermath of the COVID-19 pandemic.
Growth is projected to accelerate slightly to 2.6% for the full year 2025 before stabilizing at around 2.4% through 2026-2027. While improved weather conditions and a resurgence in key sectors are providing a short-term boost, the report warns that the medium-term outlook is hampered by “structural constraints,” including weak productivity, low investment, and limited access to foreign capital.
Inflation Cools, But Trade Deficit Widens
In a positive development for household budgets, inflation has fallen for the seventh month in a row, dropping to 4.9% in October from a peak of 10.4% in February 2023. The decline is largely attributed to falling global energy and cereal prices, with food inflation receding to 5.6%.
Yet, other economic indicators present a mixed picture. The current account deficit widened to 2% of GDP in the first half of the year, driven by rising imports and stagnant exports. This was partially offset by strong tourism revenues and remittances from abroad. In a bright spot, foreign direct investment (FDI) surged by 41% over the first seven months, propelled largely by new investments in the renewable energy sector.
On the fiscal front, the government’s budget deficit narrowed to 6.3% of GDP in 2024, though public debt remains high at approximately 84.5% of GDP.
Social Safety Nets Praised, But Reforms Urged
A special focus of the report is Tunisia’s social protection system. It finds that the government’s AMEN cash transfer program has been “central to reducing poverty and inequality,” tripling its coverage over the past decade to reach about 10% of the population.
Despite this progress, the World Bank advocates for continued reforms to improve the targeting of aid, ensure regional equity, and expand the use of digital tools. The report also emphasizes the “importance of widening economic inclusion” and gradually extending social insurance to workers in the informal sector.
“Tunisia has made important progress in its coverage for the poorest,” said Alexandre Arrobbio, World Bank Country Manager for Tunisia. “Improving the efficiency and equity of social safety nets could reduce inequalities and boost economic inclusion for vulnerable households.”
Looking ahead, the report concludes that maintaining macroeconomic stability and strengthening fiscal sustainability are essential to ensuring shared prosperity. It also identifies enhancing the performance of public enterprises and improving conditions for competition and investment as critical next steps for the North African nation.
TunisianMonitorOnline (NejiMed)
