Tunisia: Economy

Tunisia's economy has emerged from rigid state control and is now partially liberalized. Beginning in the mid-1980s, Tunisia's prudent economic policies, coupled with World Bank and International Monetary Fund (IMF) support, favorable climatic conditions for agricultural production and a strong tourism sector, resulted in stable growth with healthy exports.

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 manufactured goods, and provides for the establishment of an EU-Tunisia free trade area in goods--but not in agriculture or services; trade negotiations in these areas are ongoing.

Manufacturing industries, producing largely for export, are a major source of foreign currency revenue. Industrial production represents about 31.1% of GDP. It 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. The Government of Tunisia, working with the European Commission and other partners, has implemented several programs to upgrade the capacity of key industrial sectors to remain competitive while the country gradually opens to trade with Europe and other regions.

Tourism income ($ 2.459 billion), is a major source of foreign exchange, representing about 8.51% of hard currency receipts 28.87 billion as well as an important sector for employment. In2010, 6.9 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 diaspora (about 1 million) also makes a positive and significant contribution. In2010, remittances from abroad reached 2.334 billion dinars approximately $1.629 billion, roughly 3.68 of Tunisia’s GDP.

The country is a net importer of hydrocarbon products. Domestic crude production is 91,380 barrels per day, but refining capacity is only 34,000 barrels a day. Proven reserves are approximately 400 million barrels. Tunisia has one oil refinery on the north coast in Bizerte and in May 2006 awarded a tender to Qatar Petroleum for a second at La Skhira, near Gabes. Natural gas production is currently approximately equivalent to 3 million tons of oil per annum. Proven reserves are about 65.13 billion cubic feet, two-thirds of which are located offshore.

The United States and Tunisia signed a Trade and Investment Framework Agreement (TIFA) in October 2002 and follow-up TIFA Council meetings were held in October 2003, June 2005, and March 2008. In 2004, Tunisia signed the Agadir Agreement, a framework agreement for a multilateral trade treaty with Egypt, Jordan, and Morocco. 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. In August 2010, the Government of Tunisia passed a law opening the Tunisian economy to foreign franchises in the sectors of retail/distribution, tourism, automotives, and training. Tunisia must approve franchising in other sectors, such as food service and real estate, on a case-by-case basis.

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 ongoing collaboration between the United States and Tunisian governments to promote public awareness of these rights.

The Central Bank is moving from direct management of the financial sector toward 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, though the Government of Tunisia has publicly pledged full liberalization by 2014.

Tunisia has a relatively well-developed infrastructure that includes six commercial seaports and seven international airports. Eight foreign groups were shortlisted for the construction, financing, and exploitation of a deep water port project at Enfidha (approximately 100 miles south of Tunis).

Average annual income per capita in Tunisia is over $4,160. On May 1, 2011, the minimum monthly legal wage for a 48-hour week was raised to TND 286 ($207.064) and for 40 hours to TND 246.306 ($178.325).

While Tunisia’s growth rate has averaged 5% over the past decade, its development goals require an average 6%-7% growth rate. In 2010, real GDP growth was 3% and inflation was 4.4.4%. Growth is expected to reach barely 1.0% in 2011, a fallout of the drop in tourism following the revolution, a decline in remittances from the 30,000 Tunisians employed in Libya before conflict erupted there, and domestic expenses related to rebuilding Tunisia post-revolution and supporting the tens of thousands of evacuees and refugees who fled Libya. According to official figures, Tunisia has 19% unemployment, 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 346,079 in 2010. Providing jobs for these highly educated people represents a major challenge for the Government of Tunisia.
 

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