World Bank forecasts 1.2% growth for Tunisia in ’24

Tunisia’s economy is set to grow by 1.2 per cent in 2024, according to the World Bank’s latest report, as the country navigates sectoral struggles and seeks economic reform.

Following a modest 0.6 per cent growth in the first half of the year, Tunisia has shown limited recovery, though promising improvements in agriculture, inflation control, and external trade provide some optimism. Inflation fell to 6.7 per cent in September 2024, reaching its lowest level since January 2022.

Key sectors like oil, gas, garments, and construction continue to face difficulties, dampening overall economic recovery. However, progress in Tunisia’s renewable energy sector marks a positive development, with 500 megawatts of solar capacity set to be installed in Kairouan, Sidi Bouzid, and Tozeur.

The government aims to expand renewable capacity by an additional 1,700 megawatts by 2026, targeting 17 per cent of the country’s energy mix and potentially reducing gas imports by 30 per cent.

The World Bank report underscores the need for urgent reform of Tunisia’s tax system, particularly recommending a more balanced approach to labour and capital taxation.

The current tax structure, heavily weighted towards labour contributions, may incentivise informality and constrain job growth. Recent measures, including a property tax and increased fuel taxes, are seen as initial steps towards a fairer system, but further efforts are needed to strengthen transparency and foster economic equity.

“Despite persistent challenges, Tunisia‘s economy continues to demonstrate resilience, and new opportunities are emerging,”  said Alexandre Arrobbio, World Bank Country Manager for Tunisia. He highlighted the World Bank’s commitment to supporting Tunisia’s growth and private sector development.

Attribution: World Bank’s Equity and Efficiency of Tunisia Tax System

Subediting: M. S. Salama