European Neighbourhood Policy - South - economic statistics

Data extracted in February 2022.

Planned article update: April 2023.

Highlights

In 2020, Israel was the only European Neighbourhood Policy-South country to record GDP per capita (per person) that was above the average level for the EU.

In 2020, Lebanon’s inflation rate was 84.9 %, as measured by the increase in the consumer price index (CPI). This was the highest among the European Neighbourhood Policy-South countries which reported data. The next highest increase in the CPI in that year was in Tunisia, at 5.6 %.

Among the European Neighbourhood Policy-South countries reporting data for 2020, the current account of the balance of payments was highest in Israel, with a surplus of 5.1 % of GDP, and lowest in Algeria, with a deficit of -12.9 % of GDP.

Real GDP growth, 2010-2021 (% change compared with previous year)

This article is part of an online publication and provides data on economic statistics for nine of the countries that form the European Neighbourhood Policy-South (ENP-South) region —Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine ^[1] and Tunisia; no recent data are available for Syria.

The article presents, among others, statistics on gross domestic product (GDP); GDP by expenditure components; gross value added at basic prices by economic sector; the index of consumer prices; the external balance of payments; and foreign direct investment (FDI).

Full article

Gross domestic product

Gross domestic product (GDP) is an aggregate measure of the size of an economy, based on its total output.

Figure 1 shows the relative sizes of the economies of the European Neighbourhood Policy–South countries in 2020, with the exception of Libya, for which no data was available. For comparison, the GDP of the EU in the same year was approximately €13 400 billion.

Figure 1: Gross domestic product at market prices, 2020
(€ billion, current prices)
Source: Eurostat (nama_10_gdp) and (enps_nama_10_gdp)

Growth rates ‘real’ GDP (or constant price GDP) are shown in Table 1 for ENP-South countries and the EU for the period 2010-2021. This measure removes the effect of price changes, allowing comparisons over time.

Growth showed a decline in all reporting countries in 2020 as a consequence of the global COVID-19 pandemic. The 2021 forecast for Palestine, however, predicts a strong growth in 2021. With the exception of two intermediary years with slightly lower growth (2012 and 2015), Israel reported strong and steady growth in real GDP over the period 2010-2019, ranging from 5.7 % in 2010 to 3.8 % in 2019 before the COVID19-related fall in 2020. GDP growth slowed in Algeria from 2017 onward and in Lebanon from 2015 onward. In Palestine, there was slower growth from 2017 to 2020 and in Tunisia in 2015, the most recent data available. Morocco registered growth in GDP every year from 2010 to 2019, at growth rates between 2.6 % and 5.2 %, with a lower growth only in 2016 (1.1 %). However, Morocco's GDP fell strongly in 2020, by 6.3 %, in connection with the COVID-19 pandemic. Egypt’s growth rate increased to a level ranging from 4.2 % to 4.4 % in the period 2015-2017, the latest data available for this country, from a lower level at between 1.8 % and 2.9 % in the period 2011-2014 (no data available for 2012).

Jordan’s growth rate was more stable than elsewhere in the region, fluctuating between 3.4 % in 2014 and 2.1 % in 2012 and 2016 (the latest year available). Over the whole period (except in 2010), growth was slower in Lebanon and to a lesser extent, Tunisia, than in the rest of the region. No data are available for Libya.

The effects of the global financial and economic crisis of 2008-2009 and the subsequent sovereign debt crisis were still felt in several EU Member States for several years thereafter. Growth picked up again at EU level during the period 2014-2019, notably with growth of 2.8 % in 2017. The 2020 negative growth rate, at -5.9 %, was heavily affected by the global COVID-19 pandemic.

Table 1: Real GDP growth, 2010-2021
(% change compared with previous year)
Source: Eurostat (nama_10_gdp) and (enps_nama_10_gdp)

An analysis of GDP per capita (per person) removes the influence of the absolute size of the population, making comparisons between different countries easier. GDP per capita is therefore a broad economic indicator that may be used for a basic analysis of living standards. The calculation of the annual growth rate of GDP at constant prices, the ‘real’ change in GDP, is intended to allow comparisons of the dynamics of economic development both over time and between economies of different sizes, regardless of price developments. Nevertheless, differences in national accounts compilation methods may affect comparisons between ENP-South economies.

GDP per capita in constant 2015 prices is shown in Figure 2 for each of the ENP-South countries for which data are available. In 2020, Israel’s GDP per capita was €34 100, higher than the EU’s €28 000. The other ENP-South countries for which data was available in 2020 (or for the most recent year) recorded much lower levels. Jordan in 2016 had GDP per capita of €3 600. Algeria (2020 data) and Tunisia (2015 data) both had GDP per capita of €3 500, while Egypt’s (2017 data) was €3 300. Palestine’s GDP per capita was €2 900 EUR and that of Morocco €2 700 EUR in 2020.

Looking at ‘real’ changes in per capita GDP over the time period for which data is available, as measured in constant 2015 prices, the largest gain was in Israel, where GDP per capita in constant prices increased over 2010-2020 by an annual average of 1.5 %. In both Morocco and Palestine, GDP per capita increased by an annual average 1.3 % over 2010-2020. Low per capita growth was recorded at an annual average of 0.5 % over 2012 to 2017 for Egypt and of 0.4 % for Tunisia over 2010-2015. Per capital growth in constant prices was negative in Algeria over 2010-2020 at -0.3 % per year and in Jordan at an average of -4.0 % over 2010-2016.

The annual average per capita growth in GDP in the EU, measured in 2015 constant prices, was 0.6 % over 2010-2020. In the economies reporting data for 2020, Algeria, Israel, Morocco, Palestine and the EU, the average growth rate was negatively affected by the global COVID-19 pandemic.

Figure 2: GDP per capita, 2010 and 2020
(€ per capita, chain linked volumes, based on 2015 market prices)
Source: Eurostat (nama_10_pc), (enps_nama_10_gdp), (enps_demo_pjangr) and analysis for this publication

Expenditure components of GDP

Analysing Gross domestic product (GDP) through the expenditure approach disaggregates GDP into its components: consumption by private households and non-profit institutions serving them; final expenditure by general government on goods and services; investment (gross capital formation); changes in inventories (stocks); and the external balance, covering exports minus imports of goods and services. Only changes in inventories and the external balance can be negative. The share of investment in GDP is generally higher in wealthier countries than in less wealthy ones, so the share of household consumption is consequentially lower.

The shares of the expenditure components of GDP are shown in Figure 3 for 2010 and for 2020 or the latest data available for the European Neighbourhood Policy–South countries and for the EU. Since the components must add to 100 %, the negative values of large external deficits increase the percentage values of the other components, so making comparison difficult between economies. The net external balance is calculated in this section according to the national accounts basis. This covers exports minus imports of goods and services. Total economic transactions with the rest of the world are calculated as a balance of payments surplus or deficit, including also elements such as dividends from foreign investments, remittances, etc., and are shown for ENP-South countries as a percentage of GDP in Figure 5 below.

The external balance of goods and services was strongly negative in Jordan (2010 estimate) at -20.7 % of GDP, as well as in Lebanon in 2010 (-25.1 %) and 2019 (-20.3 %). In Palestine in 2010 the external balance of goods and services was estimated at -37.5 % of GDP, while data for 2020 showed a slightly negative balance of -0.4 %. In Algeria, the external balance was -9.6 % of GDP in 2020, having been positive at 7.0 % in 2010. Morocco had a negative external balance of -10.8 % in 2010 and -7.7 % of GDP in 2020. Lesser but still significant external balances occurred in Egypt at -5.3 % and Tunisia at -5.2 % of GDP, both in 2010.

Israel had positive external balances, at 1.9 % of GDP in 2010 and 4.6 % of GDP in 2020. Libya’s large positive external balance of 45.0 % of GDP in 2010 reflected a significant external trade balance by an oil and natural gas exporting economy.

The EU, as an economically developed region, ran external surpluses for trade in goods and services in 2010 and 2020 of 1.6 % and 3.8 % of GDP, respectively.

Investment expenditure, measured as gross capital formation, accounted for 20.5 % of Israel’s GDP in 2020. While most other ENP-South countries had high percentage values of fixed capital formation, these are often unduly increased by the presence of negative external balances, as discussed above. The oil and natural gas exporting economies had very high shares of gross capital formation: Algeria, at 34.6 % of GDP in 2020; and Libya, at 28.0 % in 2010. Lebanon recorded gross capital formation at 13.5 % of GDP in 2019; Egypt 19.2 % in 2010; Tunisia 24.6 % in 2010; and Morocco 26.4 % in 2020. Palestine’s share of gross capital formation in GDP at 0.2 % in 2020 was unaffected by any external balance issue. Investment represented 22.0 % of EU GDP in 2020.

Higher income countries also tend to have higher values for final government expenditure on purchases of goods and services as a share of GDP, although structural factors and policy choices also play a part. Israel’s government share in 2020 was 23.7 %, the highest among those reporting in the region in that year. Palestine’s share of government final expenditure on goods and services in 2020 was 22.9 % of GDP, while in 2010 it had been 25.9 %. The government share of GDP in Morocco was 20.9 % in 2020. Algeria spent 18.7 % of its GDP on government final consumption in 2020, comparable with Lebanon’s expenditure of 16.2 % in 2019, Tunisia’s of 16.6 % in 2010 and Jordan’s estimated value of 17.5 % in 2010. Two of the ENP-South countries had lower final government expenditure shares of GDP: Egypt and Libya, at 11.2 % and 9.0 % of their respective GDP in 2010. The government share of GDP was 22.5 % for the EU in 2020.

Changes in inventories / stocks tend to fluctuate from year to year. To an extent, the share in GDP of final consumption by households is determined by the shares of the expenditure components analysed above.

Figure 3: Expenditure components of GDP, 2010 and 2020
(% of GDP)
Source: Eurostat (nama_10_gdp) and (enps_nama_10_gdp_ea)

Gross value added by economic activity

Analysis of the gross value added by economic activity is useful to illustrate the changes in the structure of an economy over time. The analysis is limited by the fact that the ‘services’ category itself contains a wide variety of activities, such as government, transport services, tourism and business services. The proportion of construction in an economy typically varies over the economic cycle, with the sector doing well in periods of high growth and often contracting during recessions. The data are illustrated in Figure 4.

In the ENP-South countries, the size of the agriculture, forestry and fisheries sector accounted for 14.7 % of the Algerian economy in 2020, the largest share among the ENP-South countries which reported for that year. In contrast to the general trend among the ENP-South countries, the sector increased its share of gross value added in Algeria from 2010 to 2020, from 9.0 % in 2010. The size of the agriculture, forestry and fisheries sector accounted for 13.2 % of the Moroccan economy in 2020. In common with most other countries in the region, the sector had declined in importance from 2010, when its share of gross value added was 14.4 %. Egypt’s agriculture, forestry and fisheries sector had made up a similar 14.0 % of gross value added in 2010 but no data is available for 2020. The same sector declined to 7.1 % of gross value added in Palestine in 2020, from an estimated 8.9 % in 2010. Tunisia’s agriculture sector share in 2010 was 8.1 %; there is no data available for 2020. The remaining ENP-South countries had much smaller shares in gross value added for the agricultural, forestry and fisheries sector: Lebanon had a sector share of 3.2 % in 2019, down from 4.3 % in 2010. In Jordan, the sector share was estimated at 4.2 % in 2010; no data was available for 2020. Israel had a sector share of 1.3 % in 2020, down from 1.8 % in 2010. Libya had a sector share of 0.7 % in 2010; no data was available for 2020. The EU had a sector share of 1.8 % for agricultural, forestry and fisheries in 2020, unchanged on the 2010 figure.

Unsurprisingly, the ENP-South countries with the largest shares of the industry sector in GDP are those with large production hydrocarbons such as raw oil, natural gas and other petroleum products. Libya had a 77.7 % sector share of gross value added in 2010; 2020 data is not available. Algeria had a 21.1 % industry sector share of gross value added in 2020, down from 42.7 % in 2010. The fall was influenced by the global production downturn in the hydrocarbons sector in 2019/2020. Egypt, Tunisia and Jordan (estimated data) also have a large share of gross value added accounted for by industry: 31.3 %, 26.5 % and 25.6 %, respectively in 2010; 2020 data was unavailable for all three countries. Morocco had a slightly smaller share of industry in gross value added, at 23.2 % in 2020, up from 22.7 % ten years earlier. A further group of ENP-South countries had a lower share of industry in gross value added: Israel at 12.4 % in 2020, down significantly from 15.8 % in 2010. The share of industry in Palestine’s gross value added was forecast at 13.0 % in 2020, down from the 14.1 % estimated figure ten years earlier. Lebanon’s industry share was 10.8 % in 2019, somewhat lower than the 2010 figure of 11.5 %. The EU had a share of industry in gross value added of 19.5 % in 2020, slightly down from 19.8 % in 2010.

The share of services in gross value added in those ENP-South countries reporting data in 2020 ranged between 83.2 % in Lebanon (2019 data) and 50.7 % in Algeria. Israel, at 80.1 %, Palestine, at 75.8 % and Morocco, at 57.3 % were intermediate cases. Since the overall services sector is made up of a wide, disparate range of sub-sectors, it is difficult to draw many conclusions, apart from noting that Algeria’s large increase in the sector share in 2020 from the 37.1 % recorded in 2010 is likely to be the consequence of the reduction in the industry sector share of gross value added. In the EU, the share of services in gross value added increased from 72.6 % in 2010 to 73.1 % in 2020.

Figure 4: Gross value added by economic activity, 2010 and 2020
(% of total gross value added)
Source: Eurostat (nama_10_a10) and (enps_nama_10_a10)

Index of consumer prices

A consumer price index measures changes in the prices of a representative set of goods and services consumed by households. It is an important measure of inflation. In the European Union, the harmonised index of consumer prices provides a consumer price index that is directly comparable between countries.

Annual changes in the European Neighbourhood Policy–South countries’ national consumer price indices and the EU Harmonised index of consumer prices are shown in Table 2 for 2010-2021, providing the latest available data for each country. Over this period, the path of consumer price changes varied considerably among the countries.

Libya recorded significant inflation in the two years that it reported data, 2017 and 2018, with increases in the CPI of 25.8 % and 13.2 %, respectively. Egypt saw consumer prices rising rapidly throughout the period 2010-2019, with inflation at or above 9 % in every year except 2012 when it stood at 7.1 %. Inflation was particularly strong 2016-2018, peaking at 29.5 % in 2017. In 2019, the most recent year available, consumer prices rose by 9.2 %. The average inflation rate in Egypt in terms of CPI over the period 2010-2019 was 12.5 %.

Consumer prices in Tunisia have tended to fluctuate around a relatively high level over the period 2010-2021, with inflation ranging from 3.5 % in 2011 to a maximum of 7.3 % in 2018. In 2021, prices rose by 5.4 %. The average increase in Tunisia's CPI over this period was 5.2 %. During the period 2010-2021, Algeria’s prices rose most rapidly in 2012, at 8.9 %, and at their most moderate in 2019, at 2.0 %. Prices rose by 5.7 % in 2021 (January-June data), with an annual average increase in the CPI over the period at 4.5 %.

The path of consumer price rises in Lebanon has been a rollercoaster over the period 2010-2020. The CPI increased by 84.9 % in 2020, the latest data available. In 2015, consumer prices fell by -3.8 %. Excluding the 2020 figure, the greatest increase in the CPI was recorded in 2012 at 6.6 %; the annual average increase over 2010-2019 was 3.1 %. There is no discernible trend in the data. In Jordan, data is available for 2010-2019 (data for January-September that year). Prices rose by a maximum of 4.8 % in both 2010 and 2013 and fell by 0.9 % in 2015, the decline of the greatest magnitude. The average change in the CPI was 2.8 % a year.

In Palestine, changes in consumer prices were generally moderate and declined in magnitude over the period 2010-2020. The annual average change was 1.4 %. Data for some years is estimated. The peak rise in prices occurred in 2010 at 3.7 %. There was a slight fall in consumer prices of -0.7 % in 2020. Israel’s high point for consumer price rises was in 2011, at 3.5 %. Its low points occurred in 2015 and 2020, the most recent year for which data is available, with falls of -0.6 %. The average increase in the CPI was 0.9 % a year. For Israel, price changes tended to diminish over the period.

In Morocco, prices rose by 1.9 % in both 2013 and 2018, their fastest pace during the period 2010-2020; and by 0.2 % in 2019, their slowest pace. In 2020, the CPI rose by 0.7 %. The average change over the period was 1.1 %.

In the EU, consumer prices rose by 2.9 % in 2011 and again in 2021, their fastest pace over the period 2010-2021. The smallest price rise was recorded in 2015, at 0.1 %. The annual average price change over this period was 1.5 %.

Table 2: Index of consumer prices 2010-2021
(% change on previous year)
Source: Eurostat (prc_hicp_aind) and (enps_cpi)

Balance of payments

The current account of the balance of payments represents transactions with the rest of the world concerning merchandise, services, income and other current transfers. It is normal for countries that are very fast growing to run negative balances, which represent borrowing from the rest of the world. Developed countries often run surpluses, which represent building up assets in the rest of the world. A country’s balance of payments deficit that is greater in magnitude than the growth in its nominal GDP increases its external debt relative to GDP. Large enough deficits can lead to severe financial difficulties. Data for the European Neighbourhood Policy–South countries and the EU are illustrated by Figure 5.

In Lebanon, the balance of payments deficit that was smallest in magnitude over the period 2010-2019 was recorded in 2011 at -12.8 % of GDP. The greatest magnitude of the deficit occurred in 2013 at -26.4 % of GDP. In 2019, the deficit was -21.2 % of GDP. Over the period, the average deficit was 21.0 % of GDP; the deficits tended to become larger as a percentage of GDP.

The balance of payments deficit of Palestine was continual and substantial but did not vary by much over the period 2010-2020 (data for 2018-2019 estimated). In 2020, the deficit was at its smallest for the period, at -7.7 % of GDP. It was at its largest in 2011, at -15.8 % of GDP. The average deficit over the period was -13.1 % of GDP.

Data for Jordan’s current account deficit is only available for the years 2010, when it was -6.0 % of GDP, to 2012, when it had increased to -15.0 %. Tunisia’s deficit in 2010 was -4.8 % of GDP, its smallest for the period. It reached the lowest value of -9.1 % in 2014 and reduced slightly to -8.9 % of GDP in 2015, the most recent data available. The average over this period was -7.8 % of GDP.

Data for the balance of payments deficit of Morocco is available from 2013, when it was -7.9 % of GDP, its low point, to 2020 (provisional data), when it was -1.5 %, the smallest magnitude of the period. The average deficit was 4.2 % of GDP.

Algeria ran a payments surplus from 2010 to 2013, peaking at 8.9 % of GDP in 2011. The payments situation then deteriorated to a deficit of -16.4 % of GDP in both 2015 and 2016. Deficits have since moderated slightly: the most recent 2020 figure is -12.9 % of GDP. The average for the period was a deficit of -5.4 % of GDP.

Data for Egypt is available for 2010-2013. In 2012, its payments deficit was -3.5 % of GDP; in 2013, -1.8 %. Israel has run a payments surplus every year over the period 2010-2020, the smallest of which was 0.4 % of GDP in 2012 and the largest, 5.4 % in 2015. The 2020 value was 5.1 % of GDP, with an average over the period at 3.4 %.

The EU’s payments surplus had its minimum values in 2010 and 2011, both at 0.6 % of GDP. Its maximum was recorded in 2016 at 3.2 % and its most recent value in 2020 was 2.4 % of GDP. The average external surplus was 2.2 %. The trend over the period was toward increasing surpluses, explained by the relatively low values at the beginning of the period in the aftermath of the 2008-2009 global financial crisis.

Figure 5: Net balance of payments, current account, 2010-2020
(% of GDP)
Source: Eurostat (bop_gdp6_q) and (enps_bop_c6_a)

Foreign direct investment

Foreign direct investment (FDI) represents a lasting interest in an enterprise operating in another economy and implies the existence of a long-term relationship between the direct investor and the recipient enterprise. It forms a part of the financial account of the balance of payments. Inflows represent investment in the economy; outflows represent investment by the economy in the rest of the world. Negative values represent disinvestment. Countries that attract considerable inward investment are often themselves investors in other countries. The data can change substantially from one year to the next, reflecting major investments in individual years.

Figure 6 shows outward and inward inflows of foreign direct investment for ENP-South countries for 2010 and 2020. Israel very significantly increased its net inward investment from 2010 to 2020, the largest in the region. Morocco was the only other country in the region to increase its inward investment between these two years. Algeria, Lebanon and Tunisia all saw their inward investment flows decline.

Israel’s outward foreign direct investment declined between 2010 and 2020. In 2010, its outward direct investment had been greater than its inward flow; the opposite was true in 2020. From a much lower base, Morocco’s, Tunisia’s and Algeria’s outward flows also diminished from 2010 to 2020.

Lebanon had negative flows of outward FDI in both 2010 and 2020. These represent disinvestment, which occurs when previous investments are withdrawn from the foreign enterprises, funds flow back from the foreign company to the parent company, or negative earnings reinvested. Since the negative flows were smaller in 2020 than in 2010, the amount of disinvestment decreased.

Figure 6: Outward and inward direct investment, 2010 and 2020
(€ million)
Source: Eurostat (bop_fdi_flow_r2) and (bop_fdi6_flow) and Eurostat data collection

Source data for tables and graphs

European Neighbourhood Policy — South countries — economy: tables and figures

Data sources

The data for ENP-South countries are supplied by and under the responsibility of the national statistical authorities of each country on a voluntary basis. The data that are presented in this article result from an annual data collection cycle that has been established by Eurostat. No recent data are available from Syria. These statistics are available free-of-charge on Eurostat’s website, together with a range of different indicators covering most socio-economic areas.

Tables in this article use the following notation:

Value in italics	data value is forecasted, provisional or estimated and is therefore likely to change;
:	not available, confidential or unreliable value;
–	not applicable.

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. Statistics on prices and finance illustrate the macroeconomic environment, in particular inflation and government and external payments deficits or surpluses, and so provide the framework for government policy decisions. Foreign direct investment statistics provide a measure of the attractiveness of a country as an investment destination.

The global financial and economic crisis reinforced the need to develop more robust government statistics in order to improve the surveillance and monitoring of financial systems and the impact that the crisis may have on economies, while also providing additional valuable information to support economic initiatives geared towards recovery. The use of internationally accepted concepts and definitions permits an analysis of different economies, such as the interdependencies between the economies of the EU Member States, or a comparison between the EU and 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 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).

The European Neighbourhood Policy (ENP), launched in 2004, supports and fosters stability, security and prosperity in the EU’s neighbourhood. The ENP was revised in 2015. The main principles of the revised policy are a tailored approach to partner countries; flexibility; joint ownership; greater involvement of EU member states and shared responsibility. The ENP aims to deepen engagement with civil society and social partners. It offers partner countries greater access to the EU's market and regulatory framework, standards and internal agencies and programmes.

The Joint Communication by the European External Action Service and the European Commission on Renewed Partnership with the Southern Neighbourhood, accompanied by an EU Economic and Investment Plan for our Southern Neighbours, of 9 February 2021 further strengthens cooperation with the ENP-South countries.

The main objective of Euro-Mediterranean cooperation in statistics is to enable the production and dissemination of reliable and comparable data, in line with European and international norms and standards.

Reliable and comparable data are essential for evidence-based decision-making. They are needed to monitor the implementation of the agreements between the EU and the ENP-South countries, the impact of policy interventions and the reaching of the Sustainable Development Goals (SDGs).

The EU has been supporting statistical capacity building in the region for a number of years through bilateral and regional capacity-building. This takes the form of technical assistance to partner countries’ national statistical authorities through targeted assistance programmes and activities such as training courses, working groups and workshops, exchange of best practice and the transfer of statistical know-how. Additional information on the policy context of the ENP is provided here.

Notes

↑ 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.