Between global geopolitical tensions, soaring energy prices and slowing growth, the Tunisian economy is entering a new zone of turbulence. In a note entitled “Economic recovery in times of uncertainty for Tunisia”the Arab Institute of Business Leaders (IACE) paints a portrait of a country particularly vulnerable to external shocks, at a time when the war in Iran and the restructuring of the world economy are highlighting the limits of the Tunisian economic model.
The return of major global shocks
After the Covid-19 pandemic and then the war in Ukraine, the world economy is going through a new phase of instability marked by the return of geopolitical tensions, protectionist policies and trade uncertainties. The IACE report considers that this rupture is deep and lasting.
The note mentions in particular the volatility of international trade since 2022, amplified by the war in Ukraine, global energy disruptions, monetary tightening by major central banks and the return of offensive industrial policies in the United States, Europe and China. The institute considers that this new phase marks the end of a period of relative stability in world trade dominated by the rules of the World Trade Organization, in favor of a much more fragmented environment, where geopolitical power relations regain the upper hand over the logic of free trade.
The election of Donald Trump and the return of trade tensions around customs tariffs are also presented as an additional factor in global economic fragmentation. The IACE thus believes that the economic order dominated by the rules of the World Trade Organization is gradually crumbling in favor of a logic of competing economic blocs, opposing in particular the Western camp to the Brics+ bloc led by China. This geopolitical fragmentation is accompanied by a redefinition of economic, commercial and financial alliances, with states now seeking to secure their strategic supplies, their logistics chains and their industrial capacities.
The document also underlines that the monetary tightening initiated from 2022 by the American Federal Reserve and then by the European Central Bank has profoundly changed financing conditions on a global scale. The rise in interest rates has increased the cost of credit, reduced access to international financing and increased tensions on the most fragile emerging economies.
In this already tense context, the war in Iran acts as a new global energy shock. Tensions around the Strait of Hormuz and the rise in oil and gas prices are accentuating inflationary risks and tensions on international trade. For highly importing economies like Tunisia, the impact is immediate.
The report also considers that small countries open to the outside world must now sustainably integrate this instability into their economic strategy. He mentions the need for Tunisia to diversify its commercial partnerships, to maintain its historic relations with Western institutions while developing new cooperation with China, Turkey and even South Korea. The IACE also emphasizes the strategic potential of renewable energies and green hydrogen, which Tunisia could use to strengthen its positioning vis-à-vis Europe in the years to come.
Why Tunisia is particularly exposed
Tunisia appears today among the most vulnerable economies to this new phase of global instability. The country remains heavily dependent on energy and grain imports, even though its budgetary and financial margins are shrinking.
According to the IACE, the increase in the prices of hydrocarbons and cereals constitutes a double shock for the national economy: it increases both the need for foreign currency to finance imports and the need for budgetary financing linked to energy subsidies. The report also recalls that the disruption of international maritime routes leads to an increase in transport and insurance costs, further increasing the bill for Tunisian imports.
The document underlines that Tunisia bears the brunt of fluctuations in international markets due to its strong dependence on hydrocarbon imports, but also because the prices of cereals remain strongly correlated with those of energy, notably through the cost of fertilizers and transport. This energy and food dependence greatly reduces the country’s resilience in times of international crisis.
The report recalls that the energy deficit reached eleven billion dinars in 2025, representing alone half of the Tunisian trade deficit. 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 accentuates this vulnerability.
Added to this is a strong dependence on the European economy. The expected slowdown in growth in Europe risks weighing on Tunisian exports, particularly in textiles, while mechanical and electrical activities are holding up better for the moment. The report highlights, however, that tourism continues to show a certain resilience, benefiting from Tunisia’s positioning as a relatively secure and less expensive destination than several Asian destinations in a tense regional context.
The Tunisian economy thus finds itself simultaneously exposed to the energy shock, the European slowdown, global inflationary tensions and international logistical disruptions. This accumulation of vulnerabilities further weakens an economy whose balance has already remained precarious for several years.
An economic model that shows its limits
Beyond the economic shock, the IACE report above all highlights the structural limits of the Tunisian economic model.
Since 2011, Tunisian economic growth remains weak and unstable. The Covid-19 pandemic and then the war in Ukraine have worsened this trend, while the economic reforms undertaken over the years have remained largely unfinished. The document particularly emphasizes the lack of confidence in the future, political instability and the non-application of several reforms that have already been adopted but remain without real implementation.
The improvement recorded in 2024 and 2025, with growth of 1.6% then 2.5% respectively, remains fragile and largely linked to good climatic conditions which have supported agriculture. The IACE underlines that agricultural value added has strongly contributed to this recovery, which shows to what extent Tunisian growth still remains dependent on cyclical and climatic factors rather than on a sustainable dynamic of investment and productivity.
For the IACE, the risk is now that of a return to growth close to 1% in 2026-2027, i.e. a rate barely sufficient to absorb demographic growth. The report estimates that current energy tensions could erase part of the improvements observed since 2024 and return the Tunisian economy to a situation of near stagnation.
The report also describes an economy weakened by chronic budget deficits, growing energy dependence, a low level of productive investment, continued pressure on foreign currency reserves and an excessive reliance on domestic bank financing.
One of the major concerns raised by the study concerns state financing. With the increase in budgetary needs and the weakness of external financing, Tunisian banks find themselves increasingly called upon to absorb the needs of the State, to the detriment of financing the private sector. This situation risks, according to the IACE, further limiting the investment capacities of companies and accentuating the economic slowdown.
The report also warns against an economy increasingly dominated by logics of short-term financing, consumption and speculation, to the detriment of productive investment and value creation. This development reflects the gradual slowing down of the Tunisian growth model, in a context where budgetary space is shrinking and where monetary room for maneuver is becoming more limited.
For the IACE, each international crisis now acts as a revealer of Tunisian structural fragilities, in an economy which remains highly dependent on energy imports, public subsidies and the external situation.
The economic risk becomes concrete
The projections put forward in the note paint a particularly worrying scenario in the event that oil remains around one hundred dollars per barrel.
The report estimates that such a level could considerably increase energy compensation costs. According to his calculations, each increase of one dollar in the price of a barrel generates an additional need of around 164 million dinars for the state budget. The gap between the level of oil retained in the 2026 Finance Act and current levels on international markets could thus cause a sharp worsening of budgetary imbalances.
In this scenario, the Tunisian budget deficit could reach sixteen billion dinars in 2026, or around 8.5% of GDP. The report underlines that this increase would mainly result from the increase in energy and food compensation expenditure in a context of maintaining administered prices.
The inflationary risk also remains high. After having exceeded 9% during the Ukrainian shock, inflation could start to rise again to be between 6% and 7% at the end of the year, despite the compensation mechanisms and the blocking of certain administered prices. The IACE considers that state intervention still makes it possible to partially contain the effects of the international surge in prices, but considers that this strategy is becoming more and more costly in terms of budget.
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 inflationary wave, while accentuating tensions on foreign exchange reserves and the dinar. The study also raises the risk of rationing of certain imports if foreign currency reserves were to deteriorate further.
The external situation also gives rise to concerns. The institute estimates that the current deficit could reach eleven billion dinars in 2026, or 4.8% of GDP, with a risk of a fall in foreign exchange reserves around 80 days of imports. The document recalls that such a level would be considered insufficient to reassure external creditors in the short term, in a context where short-term external debt remains high.
The note also cites a report from the European Bank for Reconstruction and Development (EBRD) published in March 2026 according to which Tunisia is among the economies most affected by the conflict from the point of view of external payments. Recent trade balance data already show a deterioration in the trade deficit from March 2026, the first month of the Iranian crisis.
A banking system under pressure
The deterioration of budgetary and external balances is putting increasing pressure on the Tunisian banking system.
According to data cited by IACE, acquisitions of Treasury bills by banks are increasing sharply while bank refinancing is declining, a sign of a growing orientation of liquidity towards state financing. This development illustrates the gradual shift of financial resources towards public budgetary needs to the detriment of financing the productive economy.
The report is also concerned about a decline in productive investment, while the financial markets are, on the contrary, recording a strong increase in speculative activities. The Tunis Stock Exchange index thus increased by 34% in 2025 then by 19% over the first four months of 2026. For IACE, this situation reflects a reorientation of investors towards financial and speculative investments rather than towards productive projects creating growth and jobs.
Faced with this situation, the IACE calls on the Central Bank to adopt exceptional macroprudential measures inspired in particular by the Jordanian and Malaysian experiences. The document raises the possibility of further supporting bank liquidity, of setting up deferrals of maturities for businesses and households affected by the crisis, but also of creating targeted refinancing mechanisms for certain strategic sectors.
The note also emphasizes the need to preserve the stability of the banking system while avoiding a stifling of private sector financing. The institute believes that the current crisis could quickly further weaken SMEs if the conditions of access to financing were to tighten in the coming months.
Structural reforms return to the center of the debate
Beyond emergency measures, the note especially emphasizes the need to accelerate structural reforms that have remained on hold for several years.
The document calls in particular for a reform of the Exchange Code, a modernization of financing mechanisms, greater openness to foreign investments, accelerated development of renewable energies and a relaunch of major structuring projects. IACE considers that current restrictions on foreign currency operations slow down the entry of capital and limit the internationalization of Tunisian companies.
Among the projects deemed priority are phosphates, hydrocarbons, solar and wind projects, port infrastructure, logistics zones as well as several large urban projects. The report particularly emphasizes the potential of renewable energies and the prospects opened up by the Elmed electricity interconnection project with Italy.
The IACE also believes that Tunisia must review its international strategy in an increasingly fragmented world, by diversifying its partnerships while preserving its relations with Western institutions and developing new areas of cooperation with China, Turkey and South Korea. The document considers that this diversification is now becoming a strategic necessity to reduce the country’s exposure to global economic shocks.
The report finally emphasizes the need to quickly activate several public mechanisms already created but still not very operational, in particular the Commission for Major Projects and the restructuring mechanisms for public companies. The institute considers that the revival of investment cannot be achieved without a profound improvement in the business climate and without better coordination between public investment, private initiative and public-private partnerships.
A crisis revealing Tunisian fragilities
In the end, the IACE rating goes far beyond the simple economic observation linked to the war in Iran. Above all, it highlights the progressive exhaustion of Tunisian economic room for maneuver in a global environment that has become much more unstable.
Inflation, energy dependence, external deficit, weak investment, pressure on banks and vulnerability of public finances now converge towards the same question: to what extent can the Tunisian economic model absorb shocks repeated exteriors without deep structural reforms?
The current crisis thus acts as a brutal 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 initiate structural reforms could now condition its economic resilience for years to come.
I.N.
