Tunisia, at the northernmost bulge of Africa, has a strategic location along the Mediterranean Sea and it is bordered on the west by Algeria and by Libya on the south. It has a varied topography – mountainous in the north and semiarid in the south that merges into the Sahara Desert.
Poverty and unemployment in Tunisia have soared over the past decade, and in fact they were the triggers of Tunisia’s revolution in 2011. Seven years after the Arab Spring revolution, the struggles still remain for Tunisian, especially in the young population and university graduates.
Unemployment remains high in 2018 Q1 at 15.4% despite a low labour force participation. Female’s unemployment rate was nearly doubled that of men – 22.7% compared to 12.4%, according to the National Institute of Statistics (INS). The gender gap in labour participation rate was even wider – 29% for female compared to 71% for men, which are below international standards. The situation of youth unemployment remains daunting, with a recorded rate of 36% in 2017.
In order to improve economic performance and increase social stability, the Tunisian government introduced its Five-Year Development Plan 2016-2020 in September 2015. This new economic reform is based around several major themes, such as raising GDP growth to 5% annually, creating good quality jobs, improving business environments and diversification of economic sectors. Foreign and multilateral donors such as the World Bank and the African Development Bank have also provided stable stream of financial support for the country’s economic reforms.
Industrial sector contributes almost one-fourth of Tunisia’s GDP, which also drives the country’s exports. Mechanical and electrical industries accounted for more than half of the total export value in 2017, followed by the textile industry and agribusiness industry.
With tighter security and no recent terrorist attacks, Tunisia’s tourism is picking up in the past two years, reversing the damage inflicted by the Arab Spring in 2011 and gun attack in 2015. The number of visitor arrivals is expected to hit its record high at 8 million in 2018, compared to the pre-attack level at 7.2 million in 2014.
Tunisia is part of the Greater Arab Free Trade Area (GAFTA) which entered into force in 1 January 1998 with 16 other member countries including Egypt, Morocco, Libya, Saudi Arabia and UAE. The GAFTA aims to facilitate inter-trade between countries and achieve economic integration in the region. Tunisia is also a member of the World Trade Organization (WTO) and has signed a Trade and Investment Framework Agreement with the US.
Tunisia was the first country in North Africa to sign as an associate member with the EU and its trade profile is heavily oriented towards the EU, which accounted for 77% of Tunisia’s exports and 72% of its imports in 2016. France is the most important trading partner, followed by Italy, Germany and Spain. Tunisia and EU are currently negotiating for a Deep and Comprehensive Free Trade Area (DCFTA) to support Tunisia’s ongoing reforms by creating trade and investment opportunities.
China had a long history of bilateral relationship with Tunisia, although largely were unreported. The first trade deal was signed back in 1958 between the two countries, making Tunisia one of the first Arab countries to establish diplomatic ties with China.
Tunisia has signed agreement with China in July this year on its adhesion to the Belt and Road Initiative, looking to open economic cooperation in trade and investments between the two countries and curb the high youth unemployment. Given Tunisia’s close and long-established relationship with Europe, China is increasingly looking to Tunisia to serve as an ideal middleman for market expansion to Europe.
A partnership agreement on digital economy infrastructure development was signed between Tunisia and China, offering opportunities in areas such as e-commerce, telecommunications and network computing. China are also working with Tunisia in the field of satellite navigation by setting up its first overseas centre of BeiDou Navigation Satellite System (BDS) in the country which helps to boost technological advancement and further develop digital economy in the Arab countries.
In 2016, cumulative FDI in Tunisia amounted US$29 billion, according to UNCTAD. In the same year, China’s total FDI in Tunisia reached US$16.3 million.