Summary:

In May 2024, the World Bank released its Spring Economic Monitor to Tunisia, calling attention to stalling economic growth that increases economic risk on multiple fronts, even as a modest rebound is expected due to improved rainfall. 

The report indicates that 2023 was a particularly challenging economic year due to multiple overlapping factors including drought, limited access to financing, and slow movement toward economic reforms. 

Tunisia’s financing needs remain high and the government has been forced to turn to domestic banks for financing due to limited external options. Meanwhile, consumers remain frustrated by persistent goods shortages and rising food prices.  

While a moderate rebound is envisioned for 2024-2025 due to improved rainfalls that should boost grain harvests, the overall investment climate remains challenging, failing to attract business that would generate tax revenues to help balance the national budget.  

While highlighting many challenges, the report points to the potential of renewable energy as a way to address ongoing financial challenges and the precarious state of the economy. 

Outlook: 

The World Bank’s most recent Economic Monitor takes a more positive tone than prior editions, while still calling attention to some of the fundamental challenges in the Tunisian economy. 

While recent announcements indicating the launch of solar projects provide some hope in the potential of renewable energy projects, the short-term vulnerabilities in the economy remain. Among them are unwieldy public spending, the slow pace of reform, and a challenging credit market that is looking for indications of substantive economic reform. 

While the upcoming tourist season promises to provide some relief from the strain on the national budget and spur modest economic recovery, it is likely to provide temporary relief and will not address the deeper systemic challenges in the economy. 

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