ALONG the capital's palm-lined boulevards, new banks and hotels are being built. At the same time, white-washed resort complexes are springing up beside Tunisia's Mediterranean beaches. These projects are the most tangible sign of this North African country's economic awakening after nearly five years of hardship and decline. Foreign investment has picked up, and exports, especially of textiles and electronic goods, are growing. Tourism, Tunisia's single largest source of income, is expected to boom in the next decade, despite this year's slight decline.
Tunisia's ability to pull itself out of an economic tailspin before hitting the crisis level some of its neighbors are experiencing - most notably Algeria - is testimony to the country's tradition of economic prudence and efficient, generally corruption-free management, economists say.
Although per capita income stands at $1,150 - less than half that of neighboring Algeria - signs of squalor are notably absent. Even the income extremes common in developing countries are not pronounced here.
``Overall, Tunisia presents a pretty promising picture,'' says a senior economist with the World Bank. ``They're upholding a tradition of managing their budgets fairly carefully. And up to now they've been fairly consistent about implementing the economic reforms'' that the bank recommended in 1986.
These reforms aim to liberalize a highly controlled economy by easing restrictions on foreign investments, slashing price controls, and opening up the marketing of agricultural and other goods. For economists, Tunisia's accession to the General Agreement on Tariffs and Trade in August is another sign that the country is serious about joining the international market economy.
Even so, not-so-rosy indications of the country's lingering economic difficulties remain. Thousands of unemployed young men pass the day in caf'es or on park benches, while others attempt to scrape together a few dinars selling contraband goods or small bouquets of jasmine.
Agricultural reform has been stymied by several years of drought and cricket invasions, making the country's goal of reducing its dependence on food imports more difficult.
There are troubling signs, some economists say, that the government's concern about exacerbating the unemployment rate, officially 14 percent, is causing it to slow down economic reforms. The World Bank wants to see state industries exposed to greater product competition, for example, but Tunis is delaying the process of opening markets.
Acknowledging some ``slowdown'' in reforms because of poor economic performance over the past two years, government officials say there is nevertheless no question of shelving the reform process. ``It's a direction we have chosen, and we continue to consider it necessary,'' says Mustapha Nabli, minister for the economic plan and regional development.
One of the new generation of younger ministers under President Zine al-Abidine Ben Ali, Mr. Nabli says the next five-year plan now being drawn up will ``continue and reinforce the reforms'' in prices and agriculture.
Other issues needing attention, Nabli says, are better regional distribution of economic development, cutting food imports, and education reform.
As for regional development, Nabli offers ``new'' touristic developments that encourage interest in the country's mountains and southern desert, rather than just beaches, as one response.
Even if these programs succeed, the problem remains of providing for a young population. Nearly 60 percent of the nation's 8 million citizens are under 24 years of age.
``Over the next decade, half of the 2 million youth now in school will be entering the job market,'' says Mohamed Zerzeri, founder and editor of the Journal Economique d'Afrique here. ``Our most troubling question remains: Is Tunisia going to be able to find a place for them?''
Mr. Zerzeri and others note that Tunisia will become a net importer of oil in the next few years. Fresh concerns have arisen about the effect the Gulf crisis will have on the country's economy. More than 500,000 Tunisians work outside the country. Hundreds have already returned from Kuwait, and a recession in Europe and other regions could send thousands more home.
International economists and observers here, however, are confident that the economic reform program, coupled with Tunisians' desire to work, will keep the country moving forward.
``Tunisians never got the habit of living off the state,'' says a World Bank economist. ``So now they're more inclined to do whatever work it takes to keep themselves going. That attitude is one of the country's major assets.''