Economy

Overview: Tunisia has a diverse economy, with important agricultural, mining, energy, tourism, and manufacturing sectors. Governmental control of economic affairs while still heavy has gradually lessened over the past decade with increasing privatization, simplification of the tax structure, and a prudent approach to debt. Progressive social policies also have helped raise living conditions in Tunisia relative to the region. Real growth slowed to a 15-year low of 1.9% in 2002 because of agricultural drought and lackluster tourism. Better rains in 2003 and 2004, however, helped push GDP growth above 5% for these years. Tourism also recovered after the end of combat operations in Iraq. Tunisia is gradually removing barriers to trade with the European Union. Broader privatization, further liberalization of the investment code to increase foreign investment, improvements in government efficiency, and reduction of the trade deficit are among the challenges ahead.

History

Following independence from France in 1956, President Habib BOURGUIBA established a strict one-party state. He dominated the country for 31 years, repressing Islamic fundamentalism and establishing rights for women unmatched by any other Arab nation. In recent years, Tunisia has taken a moderate, non-aligned stance in its foreign relations. Domestically, it has sought to defuse rising pressure for a more open political society.