Tunisia’s Economy Rebounds Amid Growth in Tourism, Agriculture, and Reforms

The World Bank forecasts GDP growth to reach 2.6% by the end of 2025, before stabilizing around 2.4% in 2026–2027.

Tunisia's economy is showing cautious signs of recovery, driven by improvements in agriculture, construction, and tourism, according to the World Bank's latest economic update titled "Strengthening Social Safety Nets for Increased Efficiency and Equity." While the rebound is moderate, it follows several challenging years marked by sluggish growth and the lingering impact of the COVID-19 pandemic.

The update highlights a mix of macroeconomic progress and continued structural hurdles, painting a picture of gradual but fragile economic revival that hinges on both policy reforms and targeted social investment.

Real GDP Growth Shows Gradual Momentum

Tunisia's real GDP grew by 2.4% in the first nine months of 2025, indicating a modest but encouraging uptick. The World Bank forecasts GDP growth to reach 2.6% by the end of 2025, before stabilizing around 2.4% in 2026–2027.

Key growth drivers include:

• Improved agricultural yields following favorable weather

• A revival in the construction sector, particularly urban development

• A surge in tourism, buoyed by easing global travel restrictions and improved security

However, the medium-term outlook remains tempered by:

• Limited external financing options

• Subdued productivity gains

• Weak private investment and lingering structural inefficiencies

Inflation Declines for Seventh Consecutive Month

One of the more positive macroeconomic trends has been the steady decline in inflation, now at 4.9% as of October 2025, down from a peak of 10.4% in February 2023. This sustained disinflation reflects:

• Falling global energy and cereal prices

• Stabilized domestic food prices, with food inflation dropping to 5.6%

This easing of inflation is expected to relieve pressure on household purchasing power, especially for lower-income groups.

External Sector: Pressures Persist but Stabilizing Forces Emerge

The current account deficit widened to 2% of GDP in the first half of 2025, largely due to a rise in imports against flat exports. Nevertheless, resilient tourism earnings and remittances from the diaspora have helped mitigate external vulnerabilities.

Additionally, foreign direct investment (FDI) increased by 41% in the first seven months of 2025, primarily in the renewable energy sector. This inflow supported external reserves and pointed to emerging investor confidence in Tunisia's green economy potential.

Fiscal Improvement but Debt Remains High

On the fiscal front:

• The budget deficit narrowed to 6.3% of GDP in 2024, signaling an improvement in fiscal discipline

• Public debt remains elevated, estimated at 84.5% of GDP, underscoring the need for continued efforts to manage public finances and improve the efficiency of spending

Social Safety Nets at the Core of Inclusive Growth Strategy

The World Bank's report devotes a special chapter to evaluating Tunisia's social protection system, particularly the AMEN social assistance program.

Key findings include:

• AMEN coverage has tripled over the past decade, now reaching about 10% of the population

• The program has significantly contributed to poverty reduction and reduced inequality

• Gaps remain in regional equity, targeting efficiency, and inclusion of informal workers

The report urges the expansion of digital systems to improve targeting and service delivery, and calls for gradual integration of informal sector workers into contributory insurance systems.

"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."

Policy Priorities Going Forward

To build on the current recovery, the report outlines several key policy actions:

• Maintain macroeconomic stability and enhance fiscal sustainability

• Expand well-targeted social protection to shield vulnerable groups

• Enhance the performance of public enterprises

• Foster a more competitive and investment-friendly business environment

A Pivotal Moment for Long-Term Transformation

Tunisia's economy stands at a critical inflection point. The combination of modest economic recovery, improved fiscal performance, and enhanced social safety net coverage suggests progress is underway. However, deep-rooted structural challenges continue to limit the country's growth potential.

With the right reforms—especially those focused on social equity, investment climate, and public sector efficiency—Tunisia has the opportunity to accelerate inclusive and sustainable development, ensuring broader prosperity for its citizens in the years to come.