Tunisia

In-depth country-focused analysis on Tunisia's economic, political and operational risk environment, complemented by detailed sector insight

Tunisia

Tunisia is transitioning to a democratic political system, and is increasingly attracting our clients. Tunisia will be an economic outperformer in the North Africa region over the coming years, and foreign direct investment will return to the country as political stability improves. The country’s economy is well diversified, with its hugely important agricultural sector, strong manufacturing industries and a well-developed tourism sector.

We ensure our clients make sound investment decisions in Tunisia, using our risk-assessed total analysis model. Our teams keep our clients informed of the latest market moves and political developments as part of our 'top-down' and 'bottom-up' perspective. Our expert views are supported by our interactive data and forecasting. We also provide in-depth analysis on four of Tunisia’s most important industries. Our analysts will make sure you are on top in Tunisia.

Country Risk

Tunisia Country Risk

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Core Views

  • The March 2015 terrorist attack on Tunisia's Bardo Museum highlights the country's acute vulnerability to radical Islamist groups across the Middle East and the Sahel. Tourism and investment confidence will both be hit, presenting new headwinds to economic activity. However, we expect the national unity government formed at the start of the year - which brings together secularists and moderate Islamists - to survive the crisis.

  • The performance of the Tunisian economy will improve after years of subdued growth. However, numerous headwinds will prevent a stronger recovery, notably in the wake of the Bardo Museum attack. We have revised down our real GDP growth forecast for this year to 2.9%, from 3.4% previously.

  • Fiscal consolidation will proceed at a measured pace in Tunisia over the coming years, as the government...

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Tunisia Operational Risk Coverage (9)

Tunisia Operational Risk

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BMI View: Tunisia is generally a safe place for foreign business travellers, expatriate workers and tourists. However, the most significant security risk facing business operations is terrorism. The 2011 revolution has destabilised the country somewhat, resulting in politically and ideologically motivated attacks by some terrorist groups. While these are often not targeted at foreigners, there are some organisations that reject any form of Western influence and may be motivated to target areas popular with foreigners. Overall, Tunisia scores 38.6 out of 100 in the BMI Criminal and Security Risk Index, ranking tenth out of 19 countries in the Middle East and North Africa (MENA)...

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Tunisia Crime & Security

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Tunisia is generally a safe place for foreign business travellers, expatriate workers and tourists. However, the most significant security risk facing business operations is terrorism. The 2011 revolution has destabilised the country somewhat, resulting in politically and ideologically motivated attacks by some terrorist groups. While these are often not targeted at foreigners, there are some organisations that reject any form of Western influence and may be motivated to target areas popular with foreigners. Overall, Tunisia scores 40.9 out of 100 in the BMI Criminal and Security Risk Index, placing 10 th out of 18 states in the MENA region, between Israel and Morocco.

The country is taking significant steps to improve its counter-terrorism capability. This has included establishing a counter-terrorism agency that aims to monitor telecommunication and internet activity of suspected terrorists. The Tunisian...

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Tunisia Labour Market

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Overall, Tunisia places in the middle of the regional pack with regards to Labour Market risks in the Middle East and North Africa (MENA) region, despite low labour market participation, complex visa regulations and elevated labour tax posing the greatest risk to investors. While Tunisia scores favourably in terms of education, its literacy rate is still one of the lowest in the region, with high dropout rates preventing a number of Tunisians from gaining basic skills, such as numeracy. Overall, we give Tunisia a Labour Market Risk rating of 47 out of 100, placing it in 10th place out of 18 countries in the region.  

Relative to the region, Tunisia is hampered by a scarcity of labour.. This is due to a high rural population and low female participation in the workforce that drives down the size of the labour pool and limits the skills of those available. Furthermore, although Tunisia boasts second highest primary school...

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Tunisia Logistics

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Tunisia's logistics network is adequate and able to meet current demand. The country has relatively strong road connections, an open trade environment, and functional (if inconsistent) utilities supply. However, investors may be tempted to opt for other countries in the region, such as Israel, UAE or Bahrain, which offer smoother supply chains. The country's overall score of 53.5 out of 100 in the BMI Logistics Risk Index is above the global average, yet ranks poorly from a regional perspective at 11th out of 18 states, between Kuwait and Lebanon.

Tunisia is overly-reliant on thermal energy sources such as oil and gas. This problem is compounded by Tunisia's dwindling supply of its own fuel resources and need to import, which is driving up the cost of electricity and fuel. While investment in renewable energy sources should help to drive down energy costs in the long term (beyond 2018), investors for the moment face...

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Tunisia Trade & Investment

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Tunisia operates a relatively open economic environment and welcomes foreign investment in almost all sectors. Investors stand to benefit from the country's openness to trade and investment in terms of Foreign Direct Investment (FDI), access to financial markets and low levels of red tape. The principal drag on Tunisia's score is its fiscal and trade barriers. The country has low levels of government expenditure as a percentage of GDP and high levels of trade bureaucracy, such as tariff and non-tariff barriers. As a result, Tunisia scores well in our Trade and Investment Risk Index with a score of 54.9 out 100, which places the country seventh out of 18 states in the Middle East and North Africa (MENA) region, between Jordan and Saudi Arabia.

Tunisia welcomes FDI in almost all sectors of its economy, offers tax incentives to foreign investors, and operates a number of free trade zones, the largest of which is the Bizerte Harbor Free Trade...

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Tunisia Industry Coverage (5)

Autos

Tunisia Autos

Food & Drink

Tunisia Food & Drink

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BMI View: Although the Tunisian economy will still record a better performance than in recent years, we have revised down our real GDP forecasts to 3.4% in 2015 and 3.8% in 2016. The acceleration of growth will be driven by improved business confidence, which will be bolstered by the formation of a more stable government and a pick-up in domestic investment. Nonetheless, significant headwinds remain, notably in the wake of the March 2015 terrorist attack on Tunis' Bardo museum. Assuming political stability ensues, we forecast Tunisian food consumption growth to accelerate to 11.9% in 2015.

Headline Industry Data (local currency)

  • Total food consumption (local currency) growth (year-on-year, y-o-y) in 2015: +11.9%;...

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Insurance

Tunisia Insurance

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BMI View: Libya's embryonic insurance sector is unlikely to develop until after the civil war - which has now been running for over four years - ends. In Tunisia, the steady growth in the economy should boost premiums in most sub-sectors of the non-life segment. Tunisia's life segment should expand as the insurers reach new clients among the 90% or so of households who currently do not use their savings and protection offerings.

Even if Libya had not been in a state of civil war for four years, conditions would be extremely challenging for the under-developed insurance sector. The limited data available indicates that non-life insurance mainly involves the purchase of property covers by the government and its agencies. The Libyan insurers have access to global reinsurance markets:...

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Tunisia Insurance

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BMI View : We see significant potential in North Africa for insurers. However, continued economic constraints will hamper the full development of the sector over the short term, particularly the non-life segment. That being said, strong government impetus in much of the region to augment health insurance density will boost penetration over the medium term. However, we continue to expect life insurance will underperform in comparison to non-life insurance, owing to the disinclination among much of the population to purchase life insurance policies when household budgets are tight....

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Telecommunications

Tunisia Telecommunications

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BMI View : North Africa's telecommunications markets are on the cusp of change, with the licensing of 4G LTE services at the forefront of this change. 4G licences were auctioned and issued to the three existing players in Morocco in March 2015, while the authorities in Tunisia are fast-tracking the licensing of 4G with a view to seeing services launched commercially in 2016. LTE technology is already being deployed in Algeria, which is unexpected seeing as that country has historically lagged its neighbours. Increased state control over the three mobile operators in Algeria remains a concern, however. Libya is still left out of this development trend, with insecurity and political stability delaying a much...

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