Amid global geopolitical tensions, soaring energy prices, and economic slowdown, the Tunisian economy is entering a new phase of turbulence. In a note titled “Economic Recovery in a Period of Uncertainty for Tunisia,” the Arab Institute of Business Leaders (IACE) paints a picture of a country particularly vulnerable to external shocks, as the war in Iran and changes in the global economy shed light on the limits of the Tunisian economic model.
The Return of Major Global Shocks
Following the Covid-19 pandemic and the war in Ukraine, the global economy is going through a new phase of instability marked by geopolitical tensions, protectionist policies, and trade uncertainties. The IACE report suggests that this disruption is profound and enduring.
The note highlights the volatility of international trade since 2022, accentuated by the war in Ukraine, global energy disruptions, tightening monetary policies by major central banks, and the return of aggressive industrial policies in the United States, Europe, and China. The institute believes that this new phase marks the end of a period of relative stability in global trade dominated by the rules of the World Trade Organization, in favor of a much more fragmented environment where geopolitical power dynamics take precedence over the logic of free trade.
The election of Donald Trump and the resurgence of trade tensions around tariffs are also presented as an additional factor in the global economic fragmentation. The IACE suggests that the economic order dominated by WTO rules is gradually crumbling in favor of competing economic blocs, particularly pitting the West against the BRICS+ bloc led by China. This geopolitical fragmentation is accompanied by a redefinition of economic, commercial, and financial alliances, with nations now seeking to secure their strategic supplies, logistical chains, and industrial capacities.
In this tense context, the war in Iran acts as a new global energy shock. Tensions around the Strait of Hormuz, along with the rise in oil and gas prices, increase the risks of inflation and international trade tensions. For heavily importing economies like Tunisia, the impact is immediate.
The report also suggests that small countries open to the outside world must now integrate this instability into their economic strategy. It mentions the need for Tunisia to diversify its trading partnerships, maintain historical relations with Western institutions while developing new collaborations with China, Turkey, and South Korea. The IACE also emphasizes the strategic potential of renewable energies and green hydrogen, which Tunisia could use to strengthen its position vis-à-vis Europe in the coming years.
Why Tunisia is Particularly Exposed
Tunisia currently stands out as one of the most vulnerable economies amid this new phase of global instability. The country remains heavily dependent on energy and food imports, even as its budgetary and financial margins shrink.
According to the IACE, the rise in oil and grain prices constitutes a double blow to the national economy: it increases the need for foreign exchange to finance imports and the budgetary financing needs related to energy subsidies. The report also points out that disturbances in international maritime routes lead to an increase in transportation and insurance costs, further accentuating Tunisia’s import bill.
The document highlights that Tunisia is directly affected by fluctuations in international markets due to its heavy dependence on hydrocarbon imports, as well as because cereal prices are closely linked to energy prices, especially through the cost of fertilizers and transport. This energy and food dependency significantly reduces the country’s resilience in times of international crisis.
The report also notes that the energy deficit reached eleven billion dinars in 2025, representing half of Tunisia’s trade deficit alone. The weakness of national oil and gas production, combined with the rise in international prices and the depreciation of the dinar against the dollar, further exacerbates this vulnerability.
In addition, there is a strong dependence on the European economic situation. The expected slowdown in European growth could weigh on Tunisian exports, particularly in textiles, although mechanical and electrical activities are currently more resilient. However, the report emphasizes that tourism continues to show some resilience, benefiting from Tunisia’s positioning as a relatively secure and less expensive destination compared to several Asian destinations in a tense regional context.
Thus, the Tunisian economy is simultaneously exposed to the energy shock, European slowdown, global inflationary pressures, and international logistic disruptions. This accumulation of vulnerabilities further weakens an economy whose balances have remained precarious for several years.
An Economic Model Showing its Limits
Beyond the current conjunctural shock, the IACE report highlights the structural limitations of the Tunisian economic model.
Since 2011, Tunisian economic growth has remained weak and unstable. The Covid-19 pandemic and the war in Ukraine have exacerbated this trend, while economic reforms initiated over the years have largely remained incomplete. The document particularly emphasizes the lack of confidence in the future, political instability, and the non-implementation of several reforms that were adopted but have not been effectively implemented.
The improvement recorded in 2024 and 2025, with growth rates of 1.6% and 2.5% respectively, remains fragile and largely dependent on favorable climatic conditions that supported agriculture. The IACE highlights the significant contribution of agricultural value added to this recovery, indicating how Tunisian growth still relies on conjunctural and climatic factors rather than a sustainable dynamic of investment and productivity.
The risk now is a return to a growth rate close to 1% in 2026-2027, barely enough to absorb population growth. The report estimates that current energy tensions could erase some of the improvements seen since 2024 and push the Tunisian economy back into a nearly stagnant situation.
The report also describes an economy weakened by chronic budget deficits, increasing energy dependence, low levels of productive investment, continuous pressure on foreign exchange reserves, and excessive reliance on domestic bank financing.
One of the major concerns raised by the study is the state financing. With the increasing budgetary needs and the weakness of external financing, Tunisian banks are increasingly called upon to absorb the state’s needs, at the expense of financing the private sector. This situation, according to the IACE, could further limit the investment capacities of companies and accentuate economic slowdown.
The report also warns of an increasingly short-term financing logic, consumption, and speculation dominating the economy, rather than productive investment and value creation. This evolution reflects the gradual exhaustion of the Tunisian growth model, in a context where the fiscal space is shrinking and monetary leeway becomes more limited.
For the IACE, each international crisis now acts as a revealing factor of Tunisian structural weaknesses, in an economy still highly reliant on energy imports, public subsidies, and external conjuncture.
The Economic Risk Becomes Concrete
The projections presented in the note outline a particularly worrisome scenario if the oil price remains around a hundred dollars per barrel.
The report suggests that such a level could significantly increase energy compensation costs. According to their calculations, every one-dollar increase in the barrel price generates an additional need of about 164 million dinars for the state budget. The gap between the oil price set in the 2026 Finance Law and current international market levels could therefore lead to a significant worsening of budgetary imbalances.
In this scenario, the Tunisian budget deficit could reach sixteen billion dinars in 2026, approximately 8.5% of GDP. The report emphasizes that this deterioration would mainly result from the rise in energy and food compensation expenses in a context of maintaining administratively set prices.
The risk of inflation remains high as well. After exceeding 9% during the Ukrainian shock, inflation could rise to between 6% and 7% by the end of the year, despite compensation mechanisms and the freeze of certain administrative prices. The IACE believes that state intervention still partially contains the effects of the international price surge, but argues that this strategy is becoming increasingly costly budget-wise.
The report also warns of the monetary consequences of massive deficit financing by local banks and the central bank. Excessive monetary creation could fuel a new wave of inflation while increasing pressure on foreign exchange reserves and the dinar. The study also mentions the risk of rationing certain imports if foreign exchange reserves were to deteriorate further.
The external situation also raises concerns. The institute estimates that the current account deficit could reach eleven billion dinars in 2026, around 4.8% of GDP, with a risk of foreign exchange reserves dropping to around 80 days of imports. The document recalls that such a level would be insufficient to reassure short-term foreign creditors, especially in a context where short-term external debt remains high.
Additionally, a report by the European Bank for Reconstruction and Development (EBRD) released in March 2026 indicated that Tunisia is among the most affected economies by the conflict from the perspective of external payments. Recent data on the trade balance already show a deterioration of the trade deficit from March 2026, the first month of the Iranian crisis.
A Pressurized Banking System
The deterioration of budgetary and external balances is exerting increasing pressure on the Tunisian banking system.
According to data cited by the IACE, banks’ Treasury bond acquisitions are increasing significantly while bank refinancing is decreasing, indicating a growing orientation of liquidity towards financing the state. This trend illustrates the progressive shift of financial resources towards public budgetary needs, to the detriment of financing productive economic activities.
The report also expresses concern about a decline in productive investment, as financial markets experience a strong growth in speculative activities. The Tunisian Stock Exchange index rose by 34% in 2025 and then by 19% in the first four months of 2026. According to the IACE, this situation reflects a redirection of investors towards financial and speculative investments rather than productive projects that generate growth and employment.
Given this situation, the IACE calls on the Central Bank to adopt exceptional macroprudential measures inspired by experiences in Jordan and Malaysia. The document suggests the need to further support bank liquidity, implement deferments for companies and households affected by the crisis, and establish targeted refinancing mechanisms for certain strategic sectors.
The note also stresses the importance of preserving the stability of the banking system while avoiding suffocating private sector financing. The institute believes that the current crisis could quickly further weaken SMEs if access to financing becomes more challenging in the coming months.
Overall, the IACE note goes beyond the simple conjunctural assessment related to the war in Iran. It notably highlights the gradual exhaustion of Tunisian economic maneuvering margins in a global environment that has become much more unstable.
Inflation, energy dependence, external deficits, weak investment, banking pressure, and public finance vulnerabilities now converge towards a major question: how far can the Tunisian economic model absorb external shocks without deep structural reforms?
The current crisis thus acts as a stark revealer of the imbalances accumulated over several years. In a world marked by the return of geopolitical tensions, commercial rivalries, and energy uncertainties, Tunisia’s ability to quickly engage in structural reforms could now determine its economic resilience in the years to come.
The study was compiled and published by I.N.
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References to related articles throughout the text provide additional context and information on specific topics mentioned in the report.
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