Economic development in Southern Mediterranean countries

Data extracted in March 2026

Planned article update: June 2027

Highlights

In 2024 disparity in GDP per capita was wide between the Southern Mediterranean countries: from €2 417 in Palestine to €50 274 in Israel – higher than the EU average of €39 940.

In 2024 unemployment continued to pose a significant socio-economic concern for several Southern Mediterranean countries, with rates estimated at 31.5% in Palestine, 29.6% in Lebanon (2022 data) and 16.0% in Tunisia all standing well above the EU average of 5.9%. Conversely Israel reported a significantly lower unemployment rate of 3.0%.

Southern Mediterranean countries trade patterns in 2024 showed stark contrasts: while Israel’s services surplus climbs to 7.3% of GDP, Palestine’s goods deficit deepens to -35.5%.

This article is part of an online publication. It presents information on nine Southern Mediterranean countries, namely, Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine ^[1] and Tunisia. Information on these countries is compared with developments in the European Union (EU). This article does not contain any data on Syria, as cooperation with Syria was suspended from 2011 until recently and no data are collected yet. Lebanon data does not account for Palestinian refugee camps in Lebanon.

Given that data collection for the Southern Mediterranean countries is non-obligatory and subject to various changes related to the political and geographical context, data availability may often show inconsistency over the entire period presented or for recent years.

The analyses cover gross domestic product (GDP) in euros and euros per capita at current market prices, along with growth in real GDP and the evolution of unemployment rates. It also includes data on gross fixed capital formation. External balance of trade in goods and services as well as net foreign direct investments (FDI) flows from the balance of payments, are presented.

Gross domestic product (GDP)

Gross domestic product (GDP) is an aggregate measure of the size of an economy, based on its total final output. It is the standard measure of the value added created through the production of goods and services in a country during a certain period. GDP includes consumer spending, government spending, net exports, and total investments.

This indicator is based on nominal GDP (also called GDP at current prices or GDP in value). It reflects economic output in value terms.

GDP at current market prices can be used to compare the size of different economies when expressed in the same currency (for example, the euro). However, comparisons should consider population size, differences in the cost of living and the effects of inflation.

Gross domestic product at current market prices (nominal GDP) in 2024 places the European Union at €18 016.2 billion, reflecting its large economic scale. Among the Southern Mediterranean countries, Israel records €501.3 billion, followed by Egypt €286.1 billion and Algeria €248.9 billion, while Lebanon €16.8 billion (2021 estimate) and Palestine €12.7 billion (Eurostat’s estimate) are at the lower end of the range. The distribution reflects differences in aggregate economic size between the EU and Southern Mediterranean economies, as well as the variation within the Southern Mediterranean region.

Gross domestic product per capita at current market prices

Analysis of nominal GDP per capita (per person) removes the effect of the population size, facilitating comparisons between countries. Although GDP per capita at current market prices is influenced by price level changes (inflation), it provides a broad economic indicator that can be used for a basic assessment of living standards.

The Figure 2 shows substantial disparities in GDP per capita between the EU and its Southern Mediterranean partners in 2024.

The EU reports a per capita income of €39 940, significantly higher than that of all neighbouring economies considered, apart from Israel, where per capita income reaches €50 274. In this context, Israel’s per capita income substantially exceeds the other countries in the region and the EU placing the country at the upper extreme of the regional per capita income distribution.

Per capita GDP ranges from €2 722 in Egypt to €5 265 in Algeria, reflecting a substantial development gap both between these countries and relative to the EU. Jordan (€4 094; 2023 data) records a moderate level, while Palestine (€2 417) shows the lowest value, underscoring pronounced disparities across neighbouring economies. No data are available for Lebanon and Libya, which limits full regional comparison.

Overall, the data indicate a clear income gap between the EU and the Southern Mediterranean economies, with most countries recording values between €2 400 and €5 300 per capita, corresponding to around one tenth of the EU average, while Israel is the only economy exceeding the EU level.

Growth in real gross domestic product, 2020-2024

Real GDP, also called GDP at constant prices, measures the volume of output without considering changes in prices. Its annual growth rate shows the real change in economic activity and allows comparison of the dynamics of economic development over time and across countries.

Data on annual change in real GDP are shown in Figure 3 for the period 2020-2024.

Real GDP growth in Southern Mediterranean countries’ economies from 2020 to 2024 reflects the 2020 economic contraction of the region, followed by heterogeneous recovery patterns. The 2020 contraction affected most economies, except Egypt (+3.6%), and was most pronounced in Lebanon (-24.6%) and Palestine (-11.3%). Growth rebounded in 2021, particularly in Israel (+9.3%) and Morocco (+8.2%), while other economies recorded more moderate to growth (Algeria +3.8%, Jordan +3.7%, Tunisia +4.6%). From 2022 onwards, growth remained positive in most Southern Mediterranean economies at varying rates (Egypt +6.7%, Algeria +3.6%, Israel +6.4%, Morocco +1.5%, Tunisia +3.0%), with a general moderation observed by 2024 (Algeria +3.7%, Egypt +2.4%, Israel +1.0%, Tunisia +1.5%, provisional) and a sharp contraction in Palestine (-26.6%, estimated). Growth patterns remain heterogeneous across the region. Data are not available for Lebanon for the period 2022-2024, for Libya for the period 2020-2024, and for Jordan for 2024.

The EU experienced a contraction in 2020 (-5.6%), a strong rebound in 2021 (+6.4%), and a gradual slowdown thereafter, with growth reaching +1.1% in 2024.

Unemployment rates

Unemployment rates are key indicators of economic performance, reflecting labour market conditions, household income capacity and social stability across countries and regions. Analysing unemployment trends helps to identify differences in economic resilience and adjustment across countries.

Figure 4 presents the evolution of unemployment rates in the Southern Mediterranean countries compared with those in the EU. Between 2014 and 2019, the EU unemployment rate decreased steadily from 10.9% to 6.7%, a reduction of 4.2 percentage points (pp), followed by a slight increase to 7.1% in 2020-2021 during the pandemic (break in the time series in 2021) and a further decline to 5.9% in 2024.

Across the Southern Mediterranean economies, unemployment levels show pronounced differences, pandemic-related fluctuations, and heterogeneous post-pandemic developments. Palestine’s rate remained high throughout the period, rising from 25.4% in 2019 to 26.4% in 2021, before dropping to 18.4% in 2023 and increasing sharply to 31.5% in 2024 (2024 estimated, 2023-2024 data refer to the West Bank only, data unavailable on Gaza). Lebanon’s unemployment was 11.4% in 2018, rising to 29.6% in 2022 (estimated data; 2014-2017, 2019-2021, 2024 not available). After increasing from 15.3% in 2018 to 18.0% in 2021, Tunisia’s unemployment rate remained stable at 15.4-16.0% through 2024. Morocco’s unemployment rose from 9.2% in 2019 to 12.4% in 2021, with further increases to 13.4% in 2024 (2017-2024 estimated). Egypt recorded an overall decline in unemployment from 13.3% in 2014 to 6.7% in 2024, with a more pronounced decrease observed from 2019 onwards (from 8.0% to 6.7%). Algeria’s unemployment rate fluctuated between 10.5% and 11.8% from 2014 to 2019. Israel maintained low levels, decreasing from 3.8% in 2019 to 3.0% in 2024. Data for Jordan and Libya are not available.

Overall, Southern Mediterranean economies exhibit substantial variation in unemployment levels, distinct pandemic impacts, and divergent post-pandemic trends.

Gross fixed capital formation

Gross fixed capital formation (GFCF) indicates how much the value added in an economy is invested rather than consumed. It is considered an indicator of future business activity. In general, GFCF tends to increase in times of economic growth and business confidence. Conversely, it tends to decrease in case of economic uncertainty or recession.

Figure 5 presents Gross Fixed Capital Formation (GFCF) as a percentage of GDP for the Southern Mediterranean countries and the EU over the period 2014-2024.

GFCF as a share of GDP in the EU rose from 19.6% in 2014 to 22.1% in 2023, before declining to 21.2% in 2024.

Across the Southern Mediterranean countries, developments were more heterogeneous. Algeria recorded the highest investment ratios, peaking at 43.4% in 2016, declining to 30.4% in 2022, and recovering to 35.2% in 2024. Morocco, Israel, and Palestine maintained relatively high investment shares, with Morocco ranging from 25.4% to 28.7%, Israel from 21.3% to 25.3%, and Palestine from 22.0% to 25.6% in recent years.

Tunisia saw a gradual decline, from 20.3% in 2014 to 15.2% in 2024 (provisional), more accentuated after 2020. Economies affected by instability showed noticeable volatility: Lebanon contracted sharply from 24.4% in 2014 to 12.5% in 2020. Libya’s GFCF decreased from 23.2% in 2014 to 15.8% in 2019 (data for 2020-2024 not available). Egypt’s GFCF rose from 12.4% in 2014 to a peak of 18.8% in 2019, before easing back to 11.7% by 2024.

Over time, the ratio of GFCF to GDP tends to fluctuate in most countries. The ratio may be influenced by disruptions such as local political events, conflicts and disasters, which may have short-term effects on GDP, but also longer-term effects on GFCF due to instability that affects security of investments and expectations of economic growth. For economies where the petroleum industry plays an important role, international events that influence current oil and gas prices and expectations for future prices trends may also be of importance. Several of the Southern Mediterranean countries, albeit not all, saw substantial falls in 2020 in connection with the COVID-19 pandemic and the associated economic effects of lockdowns, restrictions on international travel and tourism, as well as lower international demand for petroleum products.

External balance of trade in goods and services

The external balance of trade in goods and services is the difference between exports and imports of goods and services, an important indicator of economic openness and dependence on international trade. Figure 6 presents the external balance of goods and services in the Southern Mediterranean countries for 2019 and 2024.

In 2024, the EU maintained slightly positive balances in both goods and services, at 2.1% and 1.1% of GDP respectively.

For the Southern Mediterranean countries, earlier data show that in 2019 Libya had strong goods surplus (+16.6%) but a deficit in services (-10.4%), while Lebanon recorded a significant goods deficit (-22.3%) alongside a small services surplus (+0.8%).

More recent figures for 2024 indicate that Palestine recorded net imports of goods (-35.5% of GDP) and slight net imports of services (-2.1%), resulting in a large overall trade deficit; Tunisia showed a smaller deficit in goods (-10.5%) and a surplus in services (+4.2%), partially offsetting the goods deficit; Algeria posted a modest goods surplus (+0.4%) but a slight deficit in services (-0.8%), resulting in a near‑balanced overall trade position; and Israel had a persistent goods deficit (-4.8%) but a larger surplus in services (+7.3%), maintaining a positive total balance.

Data availability is more limited for some Southern Mediterranean countries: 2024 data are unavailable for Libya and Lebanon. For Jordan, Morocco and Egypt data are not available for the period under review (2019, 2024).

Foreign direct investment balance

Foreign direct investment (FDI) arises when a unit resident in one economy makes an investment that gives control or a significant degree of influence over the management of a company resident in another economy. FDI promotes stable economic links, facilitates technology transfer, and enhances market access. Figure 7 presents net FDI in the Southern Mediterranean countries, calculated as inward minus outward FDI flows.

Israel recorded highly volatile net flows over the period, including a net outflow of €2.5 billion in 2016. Thereafter, inflows turned strongly positive, rising to €7.7 billion in 2017 and €13.5 billion in 2018. In 2019, net inflows remained positive but decreased to €7.7 billion, before increasing again to a peak of €14.3 billion in 2020. Following this peak, net inflows declined gradually in subsequent years, amounting to €11.3 billion in 2022, €7.9 billion in 2023, and €4.5 billion in the most recent year.

Lebanon maintained smaller inflows, with €1.7 billion in 2018, a dip to €0.5 billion in 2022, and a rebound to €1.3 billion in 2024.

Algeria saw stable inflows, peaking at €1.4 billion in 2016 (estimated) and rebounding to €1.1 billion in 2024. Morocco displayed more variability: after €2.4 billion in 2014, inflows decreased to €0.7 billion in 2019 and €0.2 billion in 2023, before recovering to €1.0 billion in 2024 (provisional). Tunisia experienced moderate and relatively stable inflows, reaching €0.7 billion in 2024. Data for Egypt, Jordan, Libya and Palestine are not available.

By contrast, the EU recorded predominantly net FDI outflows, with particularly sharp outflows of -€178.2 billion in 2015 and -€407.6 billion in 2021, highlighting the EU’s scale as a major global investor compared with the Southern Mediterranean region.

Source data for tables and graphs

European Neighbourhood Policy — South countries — Economic developments: tables and figures

Data sources

The data for the Southern Mediterranean countries are supplied by and under the responsibility of the national statistical authorities of each country on a voluntary basis. The data result from an annual data collection cycle that has been established by Eurostat. These statistics are available on Eurostat's website, together with a range of different indicators covering most socio-economic areas.

The European system of national and regional accounts (ESA) provides the methodology for national accounts in the EU. The national accounts data presented in this article for ENP-South countries were generally collected under the international System for National Accounts (SNA). The structure of ESA 2010 is consistent with the international guidelines on national accounting set out in 2008 SNA. Eurostat issues manuals, handbooks, and other methodological guidance to support a harmonised implementation of ESA 2010.

The gross domestic product (GDP) is the central measure of national accounts, which summarises the economic position of a country (or region). It can be calculated using different approaches: the output approach; the expenditure approach; and the income approach. The main aggregates of national accounts are compiled from institutional units, namely non-financial or financial corporations, general government, households, and non-profit institutions serving households (NPISH).

Balance of Payments (BoP) statistics is the central source for data on balance of trade in goods and services and on foreign direct investment (FDI) transactions. BoP statistics are internationally compiled based on the methodology recommended by the International Monetary Fund (IMF) Manuals on Balance of Payments and International Investment Position. For the reference period the methodological framework prevailed in external sector statistics was set up in the IMF’s Balance of Payments and International Investment Position Manual Sixth Edition (BPM6). Some countries still apply the previous edition, BPM5.

The definitions of unemployment and the labour market used are based on international recommendations by the International Labour Organization (ILO). The concepts and definitions used in the European Union labour force survey (EU-LFS) follow the resolutions of the International Conference of Labour Statisticians (ICLS) organised every 5 years by the International Labour Organisation (ILO). The unemployment rate is an important indicator with both social and economic dimensions. Increasing unemployment results in a loss of income for individuals, increased pressure with respect to government spending on social benefits and a reduction in tax revenue. From an economic perspective, unemployment may be viewed as unused labour capacity.

Context

Indicators derived from national accounts provide a picture of the economic situation; they are widely used for analysis and forecasting, as well as policymaking. The use of internationally accepted concepts and definitions enables meaningful comparisons across economies. This includes analysing interdependencies between EU Member States and comparing the EU with non-member countries.

Within the EU, multilateral economic surveillance was introduced through the stability and growth pact, which provides for the coordination of fiscal policies. Economic and financial statistics have become one of the cornerstones of governance at a global and European level, for example, to analyse national economies during the global financial and economic crisis, economic recovery after the Covid-19 pandemic or to put in place EU initiatives such as the European semester, designed to promote discussions concerning economic and budgetary priorities, or the macroeconomic imbalance procedures (MIP).

EU cooperation with the Southern Mediterranean countries is guided by the Pact for the Mediterranean ‘One Sea, One Pact, One Future’. The Pact reflects the EU’s commitment to strengthening its partnership with the southern Mediterranean countries and to building a common Mediterranean space that is connected, prosperous, resilient and secure, based on shared interests and joint responsibility.

The Pact for the Mediterranean ‘One Sea, One Pact, One Future’ sets out a long-term vision to foster shared prosperity, stability, and sustainable development across the Euro-Mediterranean region. It establishes a strategic framework for cooperation, built around three interlinked thematic “pillars”: I. People: driving force for change, connections and innovation; II. Stronger, more sustainable and integrated economies, and III. Security, preparedness and migration management. Its core objectives include strengthening economic integration through enhanced trade, investment, and digital connectivity; accelerating the green and just transition by aligning climate action, renewable energy cooperation, and water security; and promoting human development via education, youth employment, and social cohesion initiatives. The Pact also aims to deepen political dialogue to address common security challenges, like migration, while reinforcing democratic governance.

The Pact for the Mediterranean was endorsed by the EU and southern Mediterranean partners in November 2025 on the occasion of the 30th anniversary of the Barcelona process, with the European Council welcoming the Pact in its conclusions 20 November 2025. The Economic and Investment Plan for the Southern Neighbours complements this agenda.

In cooperation with its Southern Mediterranean partners, Eurostat has the responsibility to promote and implement the use of European and internationally recognised standards and methodology for the production of statistics, necessary for designing and monitoring policies in various areas. Eurostat manages and coordinates EU efforts to increase the capacity of the Southern Mediterranean countries to develop, produce and disseminate good quality data according to European and international standards. Additional information on the policy context of the Southern Mediterranean region is provided on the website of Directorate-General for Middle East, North Africa and the Gulf (DG MENA).

The EU has been supporting statistical capacity building in the region for a number of years, among others by providing technical assistance to national statistical authorities and by sharing best practice and transferring know-how. A key tool for this statistical cooperation is the MEDSTAT programme, a multiannual regional cooperation programme for statistics addressing common issues and requirements.

Footnotes

This designation shall not be construed as recognition of a State of Palestine and is without prejudice to the individual positions of the Member States on this issue. ↑