Tunisia

Tunisia is muddling through 2026 with modest growth and stubborn financing constraints. Real GDP grew about 2.5% in 2025 on an agricultural rebound, recovering automotive-component exports and resilient private consumption, with growth expected to soften toward 2.1-2.4% in 2026. Inflation eased to 5.3% for full-year 2025 from 7% in 2024, though the May 2026 print ticked back up to 5.5% on food and clothing costs. The central bank has cautiously cut its policy rate to 7.5%, but foreign reserves fell 8.2% in 2025 to around 25bn dinars, equal to roughly 107 days of import cover.

The distinctive feature of Tunisia is genuine economic diversification anchored by proximity to Europe. Tourism roared back to a record 11m-plus arrivals in 2025 (revenue ~$2.7bn), overtaking remittances as the top FX earner. The automotive-components sector — some 300 firms exporting roughly €4bn, led by wiring harnesses where COFICAB holds ~19% of the global market — is courting EV-era investment. Phosphate output recovered 28% to 3.9 Mt with backing from Saudi and Kuwaiti funds, and Tunisia is positioning as a green-hydrogen export hub via TotalEnergies' TE H2 'H2 Notos' project and a separate ~$6bn consortium MoU, both feeding the EU-backed SoutH2 corridor.

The defining risk is sovereign financing under an authoritarian turn. Public debt has passed ~80% of GDP, yet President Saied rejected the IMF's $1.9bn programme, leaving Tunisia to self-finance through domestic banks, Gulf and Algerian bilaterals, and scaled-up Chinese loans (toward $3.8bn in 2026), with a €750m Eurobond due in July 2026 to be repaid from reserves. With Saied ruling by decree since 2021, roughly 93% of tax revenue absorbed by wages, interest and subsidies, and chronic labour unrest in the phosphate basin, the market trades on a permanent default-watch even as the real economy holds together.