The World Bank has released its summer 2026 economic report on Tunisia, highlighting the country's ongoing economic recovery. Despite facing structural challenges and increasing pressure on water resources, Tunisia's economy has shown resilience. The report notes that Tunisia's real GDP growth reached 2.7% in 2025 and 2.4% in the first half of 2026. This growth has allowed the country's GDP to surpass pre-COVID-19 levels, returning to 2019 levels in the last quarter of 2024 and continuing to improve in 2025 and 2026.
The report highlights a mixed performance across various economic sectors. Industries such as food processing, mechanical and electrical industries, hotels, and restaurants have contributed to growth, while sectors like energy, textiles, and finance have experienced decline. In the first half of 2026, the agricultural sector grew by 6.4%, and the food industry by 8.9%. Conversely, energy, textile, and construction activities decreased by 3.9%, 3.3%, and 1.6%, respectively.
The labor market has shown signs of improvement, with the unemployment rate dropping to 14.9% in the second quarter of 2026. However, the World Bank cautions that this decline is largely due to changes in labor market participation rates rather than the creation of new job opportunities. The report also notes that the country's external balances have been affected by rising oil prices and the conflict in the Middle East, leading to an increase in the energy deficit and a 49% rise in the current account deficit.
Inflation in Tunisia has continued to decline, reaching 5.1% in July 2026, down from its peak of 10.4% in February 2023. The World Bank forecasts that Tunisia's economic growth will reach 2.3% in 2026 and an average of 2.1% between 2027 and 2028, provided that structural reforms are implemented. The report also predicts that the current account deficit will be 4.1% of GDP in 2026, and the budget deficit will be around 6% of GDP.
The World Bank has identified water scarcity as a significant structural challenge for Tunisia's economy. The country's per capita renewable freshwater resources are below the absolute scarcity threshold of 500 cubic meters per person per year. The report notes that eight out of the last ten years have seen rainfall below average, and while the 2025-2026 hydrological year saw an improvement in dam water levels, this is considered a temporary reprieve rather than a long-term change.
The World Bank warns that the economic losses due to water scarcity could reach 6.4% of GDP by 2050 if no action is taken to address the imbalance between water supply and demand. The agricultural sector, which employs 14% of the workforce and up to 50% of rural workers, is particularly vulnerable to these risks. The report emphasizes that investing in the water sector can create jobs and that water security is linked not only to environmental and infrastructure aspects but also to growth and employment.
To address the challenges facing the water sector, the World Bank recommends developing a legal framework, improving institutional and operational performance, and adopting suitable investment models. The report suggests that Tunisia's "Water Plan 2050" provides a strategic foundation, but the challenge lies in translating this plan into sustainable results. The World Bank proposes several measures, including updating the water code, establishing a legal framework for the reuse of treated wastewater, and gradually adjusting water tariffs.
Key points
- Tunisia's economy shows resilience with 2.7% GDP growth in 2025
- Water scarcity poses significant structural challenges to Tunisia's economy
- World Bank recommends investments in water sector to create jobs and ensure water security
