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- GDP (PPP):
- $101.0 billion
- -0.8% growth
- 3.2% 5-year compound annual growth
- $9,478 per capita
- Inflation (CPI):
- FDI Inflow:
Tunisia’s economic freedom score is 57, making its economy the 107th freest in the 2013 Index. Its score is 1.6 points lower than last year due to declines in five of the 10 economic freedoms including control of government spending, labor freedom, and freedom from corruption. Tunisia is ranked 11th out of 15 countries in the Middle East/North Africa region, and its overall score is just below the world average.
Tunisia has registered one of the 20 largest score declines in the 2013 Index, and its first post-revolutionary government faces daunting tasks. The fiscal situation remains precarious. Deficits and debt continue to expand due to poor public finance management and slow growth. Reforms that started before the uprising targeted investment and business freedom, but progress has slowed, and the regulatory framework remains inefficient.
Despite the challenging environment, efforts have been made to improve fiscal and trade freedom. A new tax collection system has been introduced, and procedures governing international trade have been modernized. However, pending agreement on a new constitution, rule of law continues to suffer. The precarious economic situation is exacerbated by widespread corruption.
Tunisia, birthplace of the “Arab Spring” uprisings against autocratic Middle Eastern governments, ousted President Zine al-Abidine Ben Ali in January 2011. After a series of interim leaders, Moncef Marzouki was elected president on December 12, 2011. Elections in October 2011 gave the formerly banned Islamist Ennhada Party the largest number of seats in parliament and a significant say in drafting a new constitution. The economy depends heavily on agriculture, mining, energy, tourism, and manufacturing. An association agreement with the European Union has helped to create jobs and modernize the economy, but the EU economic slowdown has depressed demand for Tunisian-made goods. The violent efforts of Salafi Islamists to destabilize the government, ban alcohol, and impose other Islamist goals have undermined foreign investment and tourism.
The future character of the rule of law is uncertain in Tunisia because of political instability and ongoing negotiations on a new constitution. Law enforcement is uneven across the country, and property rights are not protected effectively. Independence and fairness are poorly institutionalized within the judicial system, and widespread corruption continues to erode the foundations of economic freedom.
The top income tax rate is 35 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax (VAT) and a property transfer tax. The overall tax burden equals 20.5 percent of total domestic income. Government spending has increased to 34.8 percent of GDP. The budget has run small deficits in recent years, and public debt is around 42 percent of GDP. Social unrest and slow tourism have weakened the fiscal outlook.
The regulatory framework still lacks transparency or efficiency despite marginal improvements. The business start-up process has been streamlined on paper, but completing licensing requirements still costs more than twice the level of average annual income. The rigid labor market has fostered stagnation and failed to facilitate much-needed job creation. The government influences prices through state-owned enterprises.
The trade-weighted average tariff rate is prohibitively high at 16 percent, and non-tariff barriers further raise the cost of trade. Despite efforts to attract more foreign investment, growth in long-term investment has been inhibited by heavy bureaucracy and recent political uncertainty. The weak financial sector is fragmented and dominated by the state. Access to credit is limited, and capital markets are underdeveloped.