Event
Germany has said that Tunisia needs to project an image of stability and democracy in order to attract investors.
Analysis
During a visit to the capital, Tunis, the German foreign affairs minister, Guido Westerwelle, said that Germany would continue to support the democratic process in Tunisia and provide assistance for development. He said that Germany wanted democracy to succeed in Tunisia to provide a model for the rest of the region.
Tunisia has hung on to stability since the overthrow of the former regime in 2011, but only just. Its progress towards democracy has occasionally seemed threatened by the upsurge in political violence, including the recent murder of an opposition politician. The country has also been plagued by attacks by radical Islamists on practices that they consider un-Islamic, including art exhibitions, plays, the drinking of alcohol and Western codes of dress. Mr Westerwelle warned that the perception of a drift towards extremism threatened to drive investors away.
The Tunisian foreign minister, Othmane Jarandi, said that Tunisia was in urgent need of "extensive" assistance from its allies. This includes support for the budget and current-account deficits, and help to fund development projects aimed at stimulating growth and creating jobs, especially in the deprived interior regions where the revolution began.
The EU remains Tunisia's dominant trade partner, accounting for 79% of exports and 65% of imports in 2012. Germany is Tunisia's third-largest European trade partner after France and Italy and provided aid to Tunisia worth EUR267m (US$346m) in 2012 under a "transformation partnership". Mr Westerwelle's visit to Tunis was followed by a visit to Berlin by the president, Moncef Marzouki, during which the two sides signed a Memorandum of Understanding to increase trade and direct investment. Mr Marzouki also asked for the conversion of Tunisia's debts to Germany into development projects, but this is only likely to happen once the transition to democracy is complete. On a visit to Tunis on March 27th, the French development minister, Pascal Canfin, reaffirmed France's support for the democratic transition in Tunisia.
March 28, 2013
Rachid Ghannouchi
The founder of Hizb al-Nahda, the dominant party in the coalition government, returned to Tunisia from London on January 30th 2011, after 22 years in exile. Mr Ghannouchi has campaigned hard to portray Hizb al-Nahda as a moderate Islamist party and has likened the party to Turkey's Justice and Development Party (AKP). He was re-elected as Nahda leader for the next two years at the first congress held by the party in four decades in July. He is likely to play a significant role in shaping the policies of the party behind the scenes.
Hamadi Jebali
Mr Jebali was appointed by Moncef Marzouki, the interim president, as the interim prime minister in December 2011. Mr Jebali is a member of Hizb al-Nahda and started his career in the Nahda party in 1981 as the editor-in-chief of what was then a weekly newspaper of the party. Apart from being the prime minister, he remains the secretary-general of the Nahda party. He is an engineer by education. Nahda is expected to do well in the 2013 parliamentary election thereby putting Mr Jebali in a strong position to influence Tunisian politics.
Moncef Marzouki
Mr Marzouki founded the Congrés pour le république (CPR) in 2001. The party was banned a year later. He is a doctor and had been living in exile in France for ten years before returning to Tunisia on January 18th 2011. He was arrested several times in the 1990s because of his views on political and human rights. He was elected as the president of the present interim government by the National Constituent Assembly in December 2011. Mr Marzouki could run as a presidential candidate for the upcoming election in 2013.
Abdessalem Jrad
His position as the secretary-general of Tunisia's main trade union, the Union générale tunisienne du travail, puts Mr Jrad in a powerful position to shape the future of Tunisian politics because of the role played by trade unions in mobilising workers against Zine el-Abidine Ben Ali. He is seeking to extend the union's political influence and restore its power base to what it was before Mr Ben Ali shackled it.
Bèji Caid Essebsi
Mr Essebsi was the interim prime minister until December 2011. He was the adviser to Habib Bourguiba, Tunisia's first president, and also held some ministerial positions under Mr Bourguiba. He founded a party called Nedaa Tunis in June with the aim of encouraging secular opposition parties to unite under one umbrella. The party may get wider than expected support from secularists in the 2013 parliamentary elections given their fear of Islamic dominance.
Mohammed Jegham
Mr Jegham was a former interior and defence minister in the 1990s, who later fell out with Mr Ben Ali. He has set up a broad party, the Alliance nationale, that seeks to attract supporters of the Rassemblement constitutionnel démocratique. His party might well merge with Nedaa Tunis; if so, Mr Jegham could succeed Mr Essebsi as its leader. He could be influential if he can overcome the taint of association with the former regime.
Maya Jribi
Ms Jribi is the secretary-general of the newly established Parti republicain. This party could attract a respectable portion of the left-of-centre secular vote in the parliamentary election. If it does, it could become part of the next governing coalition but is more likely to lead the opposition.
August 14, 2012
Official name
Republic of Tunisia
Legal system
Based on the constitution of 1959
Legislature
The regime of the former president, Zine el-Abidine Ben Ali, was ousted in January 2011. Elections for a National Constituent Assembly (NCA) were held in October 2011. Cabinet positions were announced in December 2011. The NCA will also be responsible for rewriting the constitution and organising parliamentary and presidential elections
National elections
Next elections (presidential and parliamentary) have been set for June 2013. However, the constitution is being rewritten and any delay in this could push the elections back
Head of state
Mr Ben Ali stepped down on January 14th 2011, amid widespread protests. The interim head of state is Moncef Marzouki, the leader of the secular party, the Congrès pour la République. However, unlike in the regime of Mr Ben Ali, the role of the president seems to be largely symbolic
Executive
The cabinet is dominated by Hizb al-Nahda. The system of governance will be outlined in the new constitution, which is to be rewritten by the NCA
Main political parties
The major political parties include Hizb al-Nahda, an Islamist party; Congrès pour la République (CPR); Forum démocratique pour le travail et les libertés (Ettakatol); Aridha Chaabia (Popular Petition); Mouvement des démocrates socialistes (MDS); Parti démocratique progressiste (PDP); Pole démocratique moderniste (PDM)
The government
Prime minister: Ali Larayedh
Note: negotiation over a new coalition government is currently ongoing and a reshuffle will take place soon
Key ministers
Agriculture: Mohammed Ben Salem
Culture: Mehdi Mabrouk
Education: Abdellatif Abid
Environment: Memia Banna
Equipment & housing: Mohammed Salmane
Finance: Slim Besbes
Foreign affairs: Rafik Abdessalem
Health: Abdellatif Mekki
Higher education: Moncef Ben Salem
Industry & trade: Mohammed Lamine Chakhari
Information technology & communication: Mongi Marzouk
Interior: Vacant
Justice: Noureddine Bhiri
National defence: Abdelkarim Zebidi
Regional development & planning: Jamel Eddine Gharbi
Religious affairs: Noureddine Khadmi
State property & real estate: Slim Ben Hamidene
Tourism: Elyes Fakhfakh
Training & employment: Abdel Waheb Maatar
Transport: Abdelkarim Harouni
Women's affairs: Sihem Badi
Youth & sports: Tarek Dhiab
Central bank governor
Chadli Ayari
March 11, 2013
Outlook for 2013-17
Review
March 11, 2013
Fact sheet
| Annual data | 2012 | Historical averages (%) | 2008-12 |
| Population (m) | 10.7 | Population growth | 1.1 |
| GDP (US$ bn; market exchange rate) | 42.9 | Real GDP growth | 2.3 |
| GDP (US$ bn; purchasing power parity) | 94.3 | Real domestic demand growth | 2.3 |
| GDP per head (US$; market exchange rate) | 4,006 | Inflation | 4.4 |
| GDP per head (US$; purchasing power parity) | 8,811 | Current-account balance (% of GDP) | -2.4 |
| Exchange rate (av) TD:US$ | 1.56 | FDI inflows (% of GDP) | 3.9 |
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Background: Following Tunisia's independence from France in 1956, its parliament voted in 1957 to depose the bey (the hereditary ruler). Tunisia became a republic under Habib Bourguiba, who turned the country into a socially progressive but politically repressive state. In 1987 Zine el-Abidine Ben Ali became the president and ran the country on similarly autocratic lines to his predecessor. Following popular protests that began in mid-December 2010, Mr Ben Ali was forced to flee the country on January 14th 2011. The election for a National Constituent Assembly (NCA) was held on October 23rd 2011.
Political structure: Tunisia has a new interim government following the NCA election. The former ruling party, the Rassemblement constitutionnel démocratique (RCD), was dissolved on March 9th 2011. The NCA elected the leader of the Congrès pour la République, Moncef Marzouki, as president. Presidential and parliamentary elections are due to be held by June 2013.
Policy issues: Any new government will have to pursue an expansionary fiscal policy with a focus on increasing jobs through infrastructure development (especially in less-developed regions in the interior and south of the country). Banque centrale de Tunisie (the central bank) is likely to adopt a loose monetary policy to boost liquidity, but this will increase inflation. The new government will try to keep the external deficits under control, although this will be difficult.
Taxation: Income tax is levied at 15% for annual incomes of TD1,500 (US$1,000) or more, rising to a maximum of 35% on earnings above TD50,000. Foreign staff of offshore companies and of firms that export all their production pay a flat rate of 20%. Corporation tax is 30% for most firms. Foreign firms exporting at least 80% of production or investing in agricultural or regional development projects are eligible for full tax exemption on profits for ten years and 50% thereafter. Value-added tax (VAT) rates are 18%, 10% and 6%, with most goods charged at 18%. Consumption taxes of 10-700% apply to luxury products.
Foreign trade: Tunisia runs structural deficits on the merchandise trade and income accounts, whereas the services and transfers accounts are generally in surplus.
| Major exports 2011 | % of total | Major imports 2011 | % of total |
| Electrical equipment | 25.1 | Electrical equipment | 13.3 |
| Textiles | 21.1 | Petroleum & products | 12.1 |
| Petroleum & derivatives | 14.5 | Textiles | 11.3 |
| Leather & hide products | 4.1 | Machinery | 10.9 |
| Leading markets 2011 | % of total | Leading suppliers 2011 | % of total |
| France | 27.3 | France | 22.8 |
| Italy | 17.8 | Italy | 19.0 |
| Germany | 9.5 | Germany | 9.6 |
| Libya | 6.2 | Spain | 5.4 |
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March 11, 2013
Data and charts: Annual trends charts
March 11, 2013
Tunisia: Country outlook
FROM THE ECONOMIST INTELLIGENCE UNIT
POLITICAL STABILITY: The prime threat to political stability is mounting public dissatisfaction over falling living standards and rising unemployment, and concerns over the increasing Islamisation of the state. This will translate into significant levels of social unrest during the forecast period, particularly around the elections due in June 2013. The political and social malaise worsened notably during 2012 and early 2013, with an increasing number of Tunisians feeling that the government has betrayed the ideals of the revolution.
ELECTION WATCH: Presidential and legislative elections are due to take place in June 2013, although the risk of delay has been increased by the recent ructions over the cabinet. Opinion polls suggest a fall in popularity for the three previous coalition partners, reflecting the failure of the government to resolve the pressing social and economic problems facing Tunisia. Meanwhile, the main party in the secular opposition, Nida Tounes, is growing in popularity. Although we would not rule out an entirely secular ruling coalition, the government emerging from the June election is more likely to be another Hizb al-Nahda-led coalition with some secular participation. A coalition comprising both Islamist and secular parties would lower the chances of violence by the losing side, but it would also mean that establishing the clear policy lines wanted by local business and foreign investors would be more difficult.
INTERNATIONAL RELATIONS: A growing strain of intolerance in Tunisia is bad for the image of the country, which depends heavily on Western tourists and investors. However, unless the government itself were to lean towards a more hardline doctrine, we expect a substantial amount of international aid to continue to flow into Tunisia. Ties with Europe will remain strong, aided by Tunisia being granted "advanced partner" status with the EU in November 2012, although the subdued outlook for European economic prospects will also weigh on those of Tunisia.
POLICY TRENDS: The policy reform effort needs to be accelerated if Tunisia is to emerge from its current economic malaise. The most pressing issues are tackling corruption, reducing bureaucracy and improving access to finance. Reforms to archaic investment laws are also needed. The present investment code is restrictive and complex, lacking clarity and transparency.
ECONOMIC GROWTH: Growing local unrest (especially around the elections in 2013), as well as the bleak prospects for the vital EU market, will constrain economic growth in the early part of the forecast period. We forecast real GDP growth of 3.3% in 2013 and 3.5% in 2014. These levels are well below the 6%-plus growth needed to make any significant dent in unemployment, which is forecast to remain over 15% in 2013-14, adding to local resentment and possible unrest.
INFLATION: A more stable currency and lower non-oil commodity prices will help to control inflation during the forecast period. However, political and monetary policy uncertainty is likely to keep prices elevated in 2013, and high oil prices throughout the forecast period will be to Tunisia's detriment as an oil importer. After ending 2012 close to 6% and remaining elevated at an average of 5% in 2013, inflation is expected to average 3.5% annually in 2014-17. The main threats to this forecast come externally from global commodity price spikes. Indeed, a pick-up in oil prices towards the end of the forecast period is expected to push inflation up a little in 2016-17.
EXCHANGE RATES: The Tunisian dinar suffered in the first half of 2012 from the local uncertainty and the poor performance of the euro, the dominant currency in the basket to which the dinar is pegged. However, the tightening of monetary policy, coupled with a weaker US dollar following further quantitative easing, saw the dinar recover some of the lost ground in the third quarter and into 2013. Although the euro is expected to strengthen a little against the dollar overall in 2013, shaky domestic prospects in Tunisia will adversely affect the dinar's performance. There is a greater chance of an improvement in the performance of the dinar later in the forecast period, in line with stronger economic fundamentals.
EXTERNAL SECTOR: The economic troubles in the euro zone will depress demand for Tunisian goods in 2013 especially, but will remain a lingering issue in 2014 as well. In contrast, strong import growth will be driven by increased inflows of capital goods, raw materials and consumer goods. The latter has been fuelled by a sharp rise in consumer credit. Export growth will start to outpace that of imports only towards the end of the forecast period, assuming an improvement in the economic situation in the EU.
March 03, 2013
Country forecast overview: Highlights
Country forecast overview: Key indicators
| Key indicators | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
| Real GDP growth (%) | 2.9 | 3.3 | 3.5 | 4.2 | 5.0 | 5.1 |
| Consumer price inflation (av; %) | 5.6 | 5.0 | 3.7 | 3.1 | 3.4 | 3.6 |
| Budget balance (% of GDP) | -7.9 | -7.0 | -5.0 | -3.6 | -3.3 | -3.3 |
| Current-account balance (% of GDP) | -9.6 | -8.6 | -8.2 | -7.7 | -6.9 | -5.6 |
| Exchange rate TD:US$ (av) | 1.6 | 1.6 | 1.6 | 1.6 | 1.6 | 1.5 |
| Exchange rate TD:€ (av) | 2.0 | 2.1 | 2.1 | 2.0 | 2.0 | 2.0 |
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March 11, 2013
Land area
162,155 sq km
Population
10.7m (2011, Institut national de la statistique)
Main towns
Population in '000s, excluding suburbs (2011):
Tunis (capital): 1,003
Sfax: 945
Sousse: 622
Kairouan: 565
Gabès: 366
Bizerte: 552
Climate
Mediterranean on the northern and north-eastern coasts, semi-arid inland and in the south
Weather in Tunis
Hottest month, August, 21-33°C (average daily minimum and maximum); coldest month, January, 6-14°C; driest month, July, 3 mm average rainfall; wettest month, January, 563 mm average rainfall
Languages
Arabic and French
Measures
Metric system. The quintal (100 kg) is used to measure crop weights
Currency
The Tunisian dinar (TD) is made up of 1,000 millimes
Time
1 hour ahead of GMT
Public holidays
All Muslim holidays are observed in accordance with the lunar calendar, and the dates are therefore approximate: Mouled, or Prophet's Birthday (February 4th 2012); Eid al-Fitr, or end of Ramadan (August 19th 2012); Hijara, or Islamic New Year (November 15th 2012)
Other public holidays: New Year's Day (January 1st); Revolution Day (January 18th); Independence Day (March 20th); Youth Day (March 21st); Martyrs' Day (April 9th); Labour Day (May 1st); Republic Day (July 25th); Women's Day (August 13th); Independence Movement Day (September 3rd); Evacuation Day (October 15th); Commemoration Day (November 7th)
January 16, 2013