ECONOMY
Tunisia’s economy has emerged from rigid state control and is now mostly liberalized. World Bank and IMF support, coupled with prudent economic policies implemented by the Tunisian Government in the mid-eighties after a balance of payments crisis, has resulted in regular stable growth. Although this faltered after 9/11, the economy has since bounced back, thanks to healthy exports, renewed growth in tourism, and favorable climatic conditions which boosted agricultural production.
Manufacturing industries, producing largely for export, are a major source of foreign currency revenue. Industrial production represents about 28% of GDP and primarily consists of petroleum, mining (particularly phosphates), textiles, footwear, food processing, and electrical and mechanical manufactures. Textiles are a major source of foreign currency revenue, with more than 90% of production being exported. While the end of the Multifiber Arrangement in 2005 eroded Tunisia's competitiveness in its traditional European textile markets, to counteract this, manufacturers are successfully upgrading product lines and exporting smaller quantities of higher value items.
Tourism is a major source of foreign exchange, representing about 20% of hard currency receipts, as well as an important sector for employment. In 2006, 6.5 million tourists visited Tunisia, hailing largely from Europe and North Africa. While the influx of tourists represents a boon to the economy. Tunisia's large expatriate population (about 1 million) also makes a positive and significant contribution. Over the past five years, remittances from abroad averaged 1.61 million dinars (approximately 1.21 million USD) a year, or roughly 5% of Tunisia's GDP and one fourth of the country's foreign currency earnings.
Soaring oil prices have hit the Tunisian economy hard. The country is a net importer of hydrocarbon products. Domestic crude production is approximately 112,000 barrels per day, but refining capacity is only about 30,000 barrels a day. Proven reserves are in the region of 300 million barrels. Tunisia has one oil refinery in Bizerte on the north coast and in May 2006 awarded a tender for a second at La Skhira near Gabes to Qatar Petroleum. Natural gas production is currently about 3 million tons oil equivalent Proven reserves are about 2.8 trillion cubic feet, two-thirds of which are located offshore. British Gas is the major developer of the natural gas industry, and the largest foreign investor in Tunisia.
Economically and commercially, Tunisia is very closely linked to Europe. Tunisia signed an Association Agreement with the European Union (EU), which went into effect on January 1, 2008. The agreement eliminates customs tariffs and other trade barriers on a wide range of goods and services. To help prepare the Tunisian economy for this opening, the Tunisian Government in 1996 embarked on an industrial upgrading program, called "Mise a Niveau." The goal of the program was to improve the competitiveness of Tunisian industry. Launched on a pilot scale in 1996, the program, supported in part by EU grants, has consisted of technical assistance, training, subsidies, and infrastructure upgrades aimed at encouraging and assisting Tunisian private sector restructuring and modernization.
EU member states also provide the bulk of foreign direct investment (FDI), much of which has come in under the Government of Tunisia's privatization program launched in 1987. In May 2006 the Government of Tunisia announced that overall its privatization program had raised $1.9 billion, of which $1.4 billion was foreign capital. This does not include the $2.25 billion the Government of Tunisia recently received for the sale to Dubai Holding of a 35% share in the national telecommunications authority, Tunisie Telecom. Persian Gulf investments in telecommunications, real estate, and energy are also a major source of FDI.
A Trade and Investment Framework Agreement (TIFA) with the U.S. was signed in October 2002 and follow-up TIFA Council meetings were held in October 2003 and June 2005, but little progress has been made toward generating the necessary reforms required to engender a free trade agreement between the U.S. and Tunisia. A TIFA Council meeting is planned for March 2008. The framework for a multilateral trade agreement with Egypt, Jordan, and Morocco, known as the Agadir Agreement, has also been signed. The Agadir Agreement creates a potential market of over 100 million people across North Africa and into the Middle East.
The government still retains control over certain "strategic" sectors of the economy (finance, hydrocarbons, aviation, electricity and gas distribution, and water resources) but the private sector is playing an increasingly important role. Tunisia is a founding member of the World Trade Organization (WTO) and is publicly committed to a free trade regime and export-led growth. Most goods can be imported without prior licensing, although non-tariff administrative barriers sometimes delay imports of goods. Significant import duties, coupled with high consumption taxes on certain items and a value-added tax (VAT), add considerably to the local price of imported goods.
The Government of Tunisia is beginning to take a more proactive stance on intellectual property rights (IPR) enforcement and education. Tunisia's recent intellectual property rights law is designed to meet WTO TRIPS (Trade-Related Aspects of Intellectual Property) minimum standards and there is on-going collaboration between the United States and Tunisian governments to promote public awareness of these rights.
Tunisia's timely completion of its IMF program (1987-1994) and subsequent fiscal conservatism have earned it investment grade ratings from a number of international institutions, although Standard and Poor has noted that ratings on Tunisia are constrained by its highly centralized political system and the need for further structural reforms. In mid-2005 the Tunisian Central Bank issued a new Euro-denominated bond on the London financial market. The issue totaled over $450 million (400 million Euros) with a maturity of 15 years. In 2004 the Government of Tunisia sold a similar bond with a total value of nearly $550 million and seven-year maturity.
The Central Bank is moving from direct management of the financial sector towards a more traditional supervisory and regulatory role. Commercial banks are permitted to participate in the forward foreign exchange market. The dinar is convertible for current account transactions but some convertible dinar/foreign exchange account transactions still require Central Bank authorization. Total convertibility of the Tunisian dinar is probably still some years away. The dinar is traded on an intra-bank market. Trading operates around a managed float established by the Central Bank (based upon a basket of the Euro, the U.S. Dollar and the Japanese Yen). The stock exchange remains under the supervision of the state-run financial market council, and lists about 50 companies. A new phase of the Mise a Niveau program aims to double this figure.
Tunisia has a relatively well-developed infrastructure that includes six commercial seaports and six international airports. The contract to build a seventh international airport at Enfidha was awarded to the Turkish holding company Tepe Akfen Ventisres (TAV) in March 2007. A tender for a deep water port in the same region is expected also.
Average annual income per capita in Tunisia is approaching $3000. The minimum monthly legal wage for a 48-hour week was recently raised to approximately $180. Tunisia's goal of pushing per capita incomes into the middle emerging market level calls for an average 6-7% growth rate instead of 4-5%. In 2006, GDP growth was 5.2 %, but inflation spiked to 4.5 %, from 2 % the year before. Official figures claim unemployment is around 14%, but it is generally believed to be much higher in some regions. Despite the present low rate of population growth, a demographic peak is now hitting higher education and the job market. Tunisia has invested heavily in education and the number of students enrolled at university has soared from 41,000 in 1986 to over 360,000. Providing jobs for these highly educated people represents a major challenge for the Government of Tunisia.
Real GDP (2006, 2000$ mil): $25,498.
Real GDP growth rate (2006): 5.2%.
Per capita GDP, PPP (2007, IMF): $9,630.
Natural resources: natural gas, crude oil, phosphates, salt, iron ore.
Agriculture: Products--olives, dates, citrus, almonds, grains.
Industry: Types--petroleum, mining (particularly phosphate), textiles, footwear, food processing.
Services: Tourism, commerce, transport, communications.
Sector information as percent of GDP (2006 est.): Agriculture 12%; industry 33%; services 55%.
Trade (2005): Exports--$11.7 billion: hydrocarbons, agricultural products, phosphates, chemicals, textiles, mechanical, electric components. By region--Africa 9.9%, Americas 3.1%, Asia 3.7%, Europe 83.3%. By country (U.S.$ million)--France $3807.07; Italy $2598.46; Germany $926.0; Spain $739.0; Libya $635.15; Belgium $282.61; U.K. $322.0; U.S. $145.6. Imports ($15.2 billion)--industrial goods and equipment, hydrocarbons, food, consumer goods. By region--Africa 7.8%, Americas 5.9%, Asia 10.5%, Europe 75.8%. By country (U.S.$ million)--France $3461.61; Italy $2836.15; Germany $1200.61; Spain $714.69; Libya $743.0; China $501.84; U.S. $435.15.
