EY BaroMed 2017: Attractiveness of the Mediterranean, Middle East and Gulf region for foreign investment

The second edition of the EY BaroMed report is a barometer for foreign direct investment across the “Euromed region.” The 28 countries that we include in this report as part of the Euromed region share a common history and are bound by mutual flows of trade, investment and migration. Read more here.

In a world where falling commodity prices and growing instability have eroded options in more developing zones, the EU-Mediterranean countries (France, Spain, Portugal, Italy, Greece, Cyprus and Malta), with a solid institutional environment and accelerating growth, continue to appeal to investors.

Among the business leaders we interviewed, 45% think EU-Med attractiveness will improve over the next three years. For the rest, however, the Euromed has been hit by severe shockwaves, the strength of which has differed from one country to another, even if the impact has been palpable everywhere in the region. In many of the 28 countries, these ‘shocks’ have turned business, political and social models upside down.

The oil economy, which for decades had provided resources and opportunities for investment in countries across the Gulf sub-region, the Middle East and in North Africa, saw a reverse of fortune. For members of the Gulf cooperation council (GCC), diversification of economic activities and of fiscal revenues has become more vital than ever.

Since the beginning of the armed conflict in Syria more than 250,000 people have been killed. Another 11.3 million have been forced to leave their homes, causing unprecedented migration flows into Europe. Libya is still struggling to find peace and stability. Turkey, called by UNCTAD as one of the world’s twenty most attractive destinations for FDI between 2016 and 2018, has been shaken by political unrest and the fallout of the security crisis at its borders and is now on a quest to retain its macroeconomic balance.

In spite of these factors, FDI still shows a picture of resilience and (relative) confidence. The way companies invest in the region has changed, with a shifting from greenfield to M&A. Between 2011 and 2015, the number of decisions to invest in the region has actually gone up by 0.5%, enough to keep the region’s share in global flows stable.

The Euromed economy and investments in the region continue to be dominated by EU-Med countries, which account for two-thirds of the region’s GDP and 53% of all volumes invested, a situation that is unlikely to be reversed in the near future. While investment did, in fact, plummet in the Gulf Countries, which for a long time were considered the next rapid growth zone, the good news is that North Africa drew in significantly more investment decisions (+52%) thanks to large greenfield manufacturing projects. Five years after the beginning of the political shake-up, most of North Africa has regained the attention of investors who are keen to make the most out of the opportunities it has to offer.

Can this cautious optimism continue to transform into reality? A third of the international business leaders we interviewed in October 2016 said they had plans to invest in the region in the next three years. They want to participate in the overhaul of the infrastructure of the Euromed countries in order to help them to accelerate growth. These leaders believe in the potential of the region’s inhabitants as both customers and talents and cite manufacturing and technology as the top sectors they would like to invest their money in.

Yet, in order to shift from intention to investment, investors are asking governments to improve overall political stability and security for goods and persons. Without these, the promises made may very well be difficult to keep.

EY Legal Services Contacts:



Felix Plasencia Sanchez – Mediterranean Law Leader