Tunisia's Economy Under Kais Saied: Seven Years of Growth, Persistent Challenges

For Tunisian taxi driver Houssam Oueslati, the sting of inflation is personal. The cost of essential vehicle maintenance, like engine oil, has surged dramatically, forcing him to work longer hours just to cover rising operating expenses. His experience encapsulates a critical question facing Tunisia nearly seven years into President Kais Saied’s tenure: What economic changes have occurred, and have they genuinely improved the lives of ordinary citizens?

Saied assumed power amidst widespread public discontent with the political establishment, pledging a more equitable and accountable governance. Since then, Tunisia's economy has navigated the complexities of the COVID-19 pandemic, fluctuating global food and energy prices, and geopolitical instability. While these external factors have complicated recovery efforts, they do not fully explain the government's effectiveness in responding to economic challenges. Although the economy continues to expand and overall unemployment has decreased from its pandemic peak, persistent issues like high food prices, elevated youth unemployment, and strained public finances limit the government's fiscal flexibility.

The core concern for Tunisians like Oueslati is not abstract economic growth figures, but whether their income is sufficient to meet the rising cost of living. The price of engine oil, a significant expense for a taxi driver, has reportedly increased by approximately 186%, illustrating the broader pressure on household budgets.

This pressure extends beyond the transportation sector. According to the National Institute of Statistics, Tunisia's annual inflation rate reached 5.6% in September 2026, with food and beverage prices seeing an 8.4% year-on-year increase. Specific items like poultry, fruit, and lamb experienced price hikes of 16.5%, 16.3%, and 14.6% respectively. Core inflation, excluding food and energy, stood at 4.9%.

Economist Ridha Chkoundali explains that even moderate headline inflation can be painful if prices rise faster than incomes, leading to a decline in purchasing power. He notes that prices often remain elevated even when inflation slows, meaning households do not automatically recover lost purchasing power. Chkoundali estimates that average annual inflation was 6.8% between 2015 and 2021, escalating to 8.1% between 2021 and 2026, indicating intensified inflationary pressures in the more recent period.

In an effort to alleviate financial strain, the Central Bank of Tunisia has reduced its key interest rate twice in 2025, bringing it down to 7%. However, lower borrowing costs alone cannot fully restore purchasing power diminished by rising prices. Chkoundali also points to tighter access to credit as a factor limiting consumers' ability to manage expenses, as changes in financing conditions and cheque regulations have reduced options for spreading payments over time.

Economically, Tunisia saw a year-on-year growth of 2.3% in the second quarter of 2026, according to the National Institute of Statistics. This figure fell short of the 2026 Finance Law's projection of approximately 3.3% annual growth. Chkoundali suggests this discrepancy highlights a fundamental issue: economic growth only benefits households when it translates into increased production, investment, employment, and income.

The labor market underscores this challenge. While Tunisia's overall unemployment rate stood at 14.9% in the second quarter of 2026, down from 15.3% a year prior, this figure masks a more severe situation for young Tunisians. Unemployment among those aged 15 to 24 reached 35.4%, and among university graduates, it was 26.6%. For many young people, the primary obstacle is not just finding work, but securing a job that offers stability, reliable income, and a pathway to independence.

Chkoundali identifies weak investment and declining production as significant constraints. He also warns that the government's increasing reliance on domestic borrowing could impede private businesses' access to financing, hindering their expansion and hiring capabilities. Domestic borrowing reportedly amounted to approximately 7 billion dinars ($2.3 billion) in both 2024 and 2025, with 11 billion dinars ($3.7 billion) borrowed at the start of 2026. This raises concerns about potential competition between state financing needs and private sector credit requirements.

President Saied has prioritized combating monopolies and speculation as a cornerstone of his economic agenda, aiming to protect consumers and curb unfair practices. However, critics argue that the authorities have not always effectively distinguished between genuine speculation and necessary inventory management. Restrictions that disrupt supply chains without offering alternatives can, paradoxically, exacerbate shortages and drive up prices.

The government also faces constraints related to public debt. Tunisia's public debt rose from 67.8% of GDP in 2019 to 84.9% in 2024, before slightly decreasing to 82.1% in 2025. While debt levels alone do not determine fiscal sustainability, substantial financing needs can limit the state's flexibility in responding to economic shocks. Debt servicing competes with essential public expenditures such as wages, social spending, subsidies, and investment.

The impact of global energy prices is another significant challenge. Tunisia's 2026 Finance Law was based on an assumed Brent crude price of around $63.30 per barrel, but prices reached approximately $92.60 by the end of June 2026. This surge increased the potential cost of energy imports and fuel subsidies, placing additional strain on public finances. Fuel subsidies in the first half of 2026 amounted to 2.427 billion dinars ($826 million), representing 48.6% of the allocated budget for subsidies. In contrast, public investment expenditure for the same period totalled 1.665 billion dinars ($566.6 million).

This situation highlights the difficult balancing act the government faces: protecting consumers from immediate price increases through subsidies versus investing in long-term economic growth. Maintaining subsidies becomes more costly when international prices rise, potentially diverting resources from crucial public investments. Conversely, abrupt subsidy cuts could shift the burden onto households and businesses. Furthermore, a larger energy import bill can strain foreign currency reserves, particularly if export earnings do not compensate for the increased costs.

Supporters of President Saied argue that his economic record should be viewed in the context of the challenges he inherited. Houssam Ben Ahmed, a political activist, contends that Saied took office in a country already facing significant decline across various sectors, describing the measures of July 25, 2021, as a necessary intervention to stabilize the state. From this perspective, subsequent disruptions are seen as consequences of addressing long-standing issues rather than solely attributable to Saied's policies.

While inherited problems and external shocks are significant factors, they do not negate the need to scrutinize policy decisions made during Saied's presidency. The assessment of Tunisia's economic performance over the past seven years remains mixed. The economy is growing, and overall unemployment has decreased, yet high food prices, persistent youth unemployment, and fiscal pressures continue to pose significant challenges. A more robust recovery would involve stronger productive investment, stable job creation, increased domestic production, and incomes that keep pace with the cost of living, all while managing public finances prudently.

For individuals like Houssam Oueslati, the economic reality is measured by the daily struggle to keep his taxi operational and his earnings sufficient to cover rising expenses. While one person's experience cannot define the success or failure of an entire economic program, it powerfully illustrates the gap between national statistics and the lived reality of Tunisians striving for a secure standard of living.