The Greater Middle East, a region defined by its strategic importance and resource wealth, faces a confluence of challenges that threaten its economic stability and investor confidence. Chronic governance failures, staggering youth unemployment, and overreliance on hydrocarbons have created a fragile landscape for investors. Yet within this turmoil, palladium (PALL) presents an intriguing paradox: its demand in the automotive sector remains robust, even as regional instability lingers. This article explores how structural weaknesses in Morocco, Algeria, and Tunisia could amplify geopolitical risks while offering cautious opportunities in the precious metals market.

The Structural Weaknesses: Youth Unemployment as a Time Bomb

The youth unemployment crisis in North Africa is staggering. According to World Bank/ILO data as of July 2025, Tunisia’s youth unemployment rate (ages 15–24) hit 40.05% in 2024, while Algeria’s stood at 29.76%, and Morocco’s at 22.08%. These figures, captured in the table below, reveal a region where nearly one in three young people are jobless—a demographic time bomb with far-reaching consequences.

CountryYouth Unemployment Rate (2024)Tunisia40.05%Algeria29.76%Morocco22.08%

Why This Matters for Investors
High youth unemployment fuels social unrest, weakens domestic consumption, and discourages foreign investment. In Tunisia, where unemployment is nearly double the global average, tourism—a critical revenue source—has been hit by political instability and labor strikes. Similarly, Algeria’s energy-dependent economy struggles to diversify, leaving it vulnerable to oil price swings. Meanwhile, Morocco’s lower but still elevated youth unemployment rate masks deeper issues in sectors like textiles and tech, where job creation lags behind graduate numbers.

Geopolitical Risks and the Hydrocarbon Curse

The region’s reliance on hydrocarbons amplifies economic fragility. Algeria, for instance, derives over 95% of its export revenue from oil and gas. Fluctuations in global energy prices—often tied to geopolitical events like Iran’s nuclear talks or Middle Eastern conflicts—directly impact fiscal stability. This volatility creates a “resource curse,” diverting investment away from long-term infrastructure and education.

Why Palladium (PALL) Could Still Shine

Despite these risks, palladium’s demand remains resilient. The metal’s role in catalytic converters—critical for reducing vehicle emissions—anchors its value to global automotive production. Even if Middle Eastern instability disrupts local manufacturing or tourism, the automotive sector’s global nature buffers demand.

Key Drivers for PALL
– Automotive Demand: Electric vehicles (EVs) may reduce platinum use, but palladium’s role in gasoline engines ensures sustained demand.
– Supply Constraints: South Africa and Russia dominate palladium production, and geopolitical tensions in these regions can tighten supplies.

Risks and Hedging Strategies

While PALL’s fundamentals are strong, investors must account for volatility. Regional unrest—such as Algeria’s protests or Tunisia’s political gridlock—could spill into global markets, affecting commodity prices.

Recommendations
1. Position Sizing: Allocate no more than 5–7% of a portfolio to PALL to avoid overexposure.
2. Hedge with Derivatives: Use put options or inverse ETFs (e.g., PALL’s short-term counterpart) to mitigate downside risks from geopolitical flare-ups.
3. Diversify Globally: Pair PALL investments with palladium-backed ETFs or companies like Johnson Matthey (JMAT.L), which benefit from consistent demand.

Conclusion

The Greater Middle East’s structural weaknesses—youth unemployment, governance gaps, and hydrocarbon dependency—pose long-term risks to investors. Yet palladium’s role in the global auto industry offers a counterintuitive opportunity. By maintaining a cautious stance and hedging against volatility, investors can navigate these risks while capitalizing on palladium’s enduring industrial relevance.

In a region where stability is elusive, palladium’s resilience underscores the adage: Invest in what the world needs, not just what the headlines fear.