Tunisia’s Numbers Are Improving and Its Companies Are Being Squeezed
TUNISIA · ECONOMY
Key Facts
—Growth: The IMF expects 2.1% growth in 2026, and the African Development Bank 2.8% in 2027, led by tourism and industrial exports.
—Inflation: Consumer inflation has fallen from 7.0% to 5.3%, giving the central bank room to ease.
—Policy rate: The Banque Centrale de Tunisie lowered its key rate to 7% in early 2026.
—Deficit: The budget deficit narrowed to 5.2% of GDP in 2025, helped by better revenue collection and lower energy subsidies.
—Debt: Public debt has stabilised at about 82.1% of GDP, which is the good news and the problem at once.
—The squeeze: Heavy reliance on domestic financing is crowding private borrowers out of the banking system.
—The drag: Weak private investment, labour-market rigidity and limited productivity gains are expected to keep growth capped.
—The catch: The debt is stable but financed at home, which squeezes Tunisian companies out of the credit they need.
The Tunisia economy is forecast to grow 2.1% this year, with inflation down to 5.3% and the budget deficit narrowed to 5.2% of GDP. The uncomfortable part sits underneath: public debt of about 82.1% of GDP is being financed at home. It is squeezing the country’s own companies out of the credit they need.
What the forecasts say
The International Monetary Fund has kept its 2026 growth forecast for Tunisia at 2.1%. The African Development Bank pencils in 2.8% for 2027. Tourism and a recovery in industrial exports are doing most of the work.
The African Development Bank’s country outlook points the same way and adds the constraints. Weak private investment, rigidity in the labour market and limited productivity gains are the reasons the number does not start with a three.
Two per cent growth is not a crisis and it is not a recovery either. In a country with Tunisia’s demographics, it is roughly the rate at which unemployment stays where it is.
The inflation win is real
Consumer inflation came down from 7.0% in 2024 to 5.3% in 2025, though the African Development Bank expects 5.7% this year. That is a meaningful improvement for households whose wages have not moved much.
It also gave the Banque Centrale de Tunisie room to cut its key rate to 7% in January 2026. The bank has held it there at every meeting since. Lower policy rates are supposed to feed through into cheaper credit for firms.
Whether they do depends on who is standing at the front of the queue for that credit. In Tunisia, the answer is the state.
Why the debt number is misleading
Public debt has stabilised at around 82.1% of GDP, and stabilisation after years of increase is genuine progress. The composition of that debt is what deserves attention.
Tunisia has leaned heavily on domestic financing, which means the banking system holds a large stock of government paper. Every dinar a bank lends to the treasury is a dinar it does not lend to a manufacturer.
Economists call this crowding out. Business owners call it not being able to get a loan.
The fiscal improvement, and what paid for it
The deficit narrowed to 5.2% of GDP in 2025 on the back of better revenue collection and lower energy subsidies. Both are real gains and neither is painless.
Subsidy reduction lands on households immediately and shows up in the fiscal accounts within a year. Improved collection lands on the formal sector, which is the part of the economy already paying.
The risk in both is political rather than arithmetic. Fiscal consolidation that squeezes the compliant while the informal economy grows is not durable.
Tourism is carrying more than it should
The recovery is led by tourism, which is a familiar position for Tunisia and a fragile one. Visitor numbers respond quickly to security incidents and to conditions in European source markets.
Industrial exports are the healthier component, because they reflect production capacity rather than sentiment. Their recovery is the number to watch over the next two years.
A growth model that rests on arrivals is exposed to decisions taken in other countries. That is not a criticism of tourism; it is a description of concentration risk.
What an outside investor sees in the Tunisia economy
For a foreign investor, Tunisia offers a skilled workforce, proximity to Europe and an established manufacturing base in components and textiles. Those advantages have not changed.
What has changed is the cost of local finance and the predictability of policy. An investor who needs domestic working capital is competing with the treasury for it.
That is why the crowding-out point matters more than the headline growth rate. It determines whether an investment can be scaled once it is made.
The reform that is not happening
The consistent recommendation from the Fund and the development banks concerns state-owned enterprises, the wage bill and labour-market flexibility. None of those is politically easy anywhere.
Tunisia has been in an extended negotiation with itself about how much external conditionality it is willing to accept. That debate has real costs while it continues.
Meanwhile the private sector adjusts by staying small. Firms that cannot borrow do not hire.
What to watch next
The first marker is the 2027 budget and how much of it is financed domestically. A shift towards external or concessional financing would ease the squeeze directly.
The second is credit growth to the private sector, which is the cleanest measure of whether the rate cut reached anyone. Policy rates and lending volumes can move in opposite directions.
The third is the export series. If industrial exports keep recovering while tourism plateaus, the growth number becomes more durable than it currently looks.
Frequently Asked Questions
How fast is Tunisia’s economy growing?
Growth is forecast at 2.1% in 2026 and 2.8% in 2027, driven by tourism and a recovery in industrial exports. Weak private investment and limited productivity gains are expected to cap the rate.
What has happened to inflation?
Consumer inflation has fallen from 7.0% to 5.3%. That allowed the Banque Centrale de Tunisie to lower its key interest rate to 7% in early 2026.
How large is Tunisia’s public debt?
Public debt has stabilised at about 82.1% of GDP. The concern is that it is heavily financed domestically.
What does crowding out mean here?
Banks that hold large amounts of government paper have less capacity to lend to companies. In practice, private firms find credit harder and more expensive to obtain.
Has the budget deficit improved?
Yes. It narrowed to 5.2% of GDP in 2025, supported by better revenue collection and lower energy subsidies.
Connected Coverage
Our North Africa file includes the European Union’s shift on Western Sahara, and Egypt and China widening their currency swap. Debt and financing conditions across the continent sit inside Africa: The New Scramble.
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