Assuming an easing of the current drought and slightly more favorable financing conditions, the World Bank (WB) forecasts growth of 2.4% for Tunisia in 2024, followed by 2.3% in 2025 and 2026.
With this growth rate, real GDP would finally reach its pre-COVID-19 level in 2024, four years after the pandemic.
According to the WB, this modest growth is due to difficult conditions related to water scarcity, uncertainty about debt financing and weak momentum in structural reforms.
The budget deficit is projected to narrow slightly to 6.1% of GDP in 2024 (from 6.7% of GDP in 2023). This is mainly due to a decline in subsidies and wages in real terms and a moderate increase in tax revenues.
Similarly, gross borrowing is projected to increase further to 16.1% of GDP in 2024 (from 13.8% in 2023) due to high external debt service. Inflation is expected to rise to 7% in 2024, 6% in 2025 and 5% in 2026.
The current account deficit is estimated by the World Bank to remain stable at 2.4% of GDP in 2024, as tourism receipts continue to grow. With foreign direct investment (FDI) projected to remain relatively stable and portfolio investment minimal, foreign borrowing is expected to continue to finance the current account deficit.
On the other hand, the World Bank predicts an increase in poverty, with an estimated increase of 1.5% based on the lower-middle-income poverty line.
Finally, the WB believes that if the drought persists, projections could be revised downwards due to the negative impact on agriculture and the trade balance.
