Bahrain Economic Forecast

Bahrain Economic Outlook

November 30, 2021

Conditions should have continued to improve in H2, following the economy’s return to growth in the second quarter. In early July, infection rates plunged to their lowest levels since the start of the pandemic, which, coupled with the fast vaccine rollout, allowed authorities to ease restrictions throughout the period. Meanwhile, in late October the government presented a detailed multi-year, five-pillar growth and fiscal balance plan—one of Bahrain’s largest economic reform programs. The plan, which aims to strengthen long-term competitiveness and support the post-pandemic recovery, sees a balanced budget by 2024 and pencils in the previously-announced doubling of the VAT to 10.0% in 2022. It plans to boost employment, includes USD 30 billion for investment in strategic projects, and aims to attract USD 2.5 billion in foreign direct investment by 2023. It was approved by parliament on 3 November. Consequently, on 26 November, S&P Global Ratings affirmed the country’s ‘B+’ rating and upgraded the outlook to stable, highlighting progress on fiscal reforms to reduce the deficit burden.

Bahrain Economic Growth

Economic growth is seen accelerating marginally in 2022 following this year’s projected bounce-back, boosted by a stronger expansion in investment. That said, risks are tilted to the downside: They include political tensions, potential austerity measures to achieve a balanced budget by 2024, and lower-than-breakeven oil prices. FocusEconomics analysts project the economy to expand 3.1% in 2022, which is unchanged from last month’s forecast, and 2.3% in 2023.

Bahrain Economy Data

2015 2016 2017 2018 2019
Population (million)
GDP per capita (USD)22,64522,59724,33425,42425,461
GDP (USD bn)
Economic Growth (GDP, annual variation in %)
Consumption (annual variation in %)-  -  -  -  -  
Investment (annual variation in %)-8.510.811.04.7-  
Unemployment Rate3.54.34.1-  -  
Fiscal Balance (% of GDP)-13.0-13.6-10.0-6.3-4.7
Public Debt (% of GDP)60.471.879.580.783.0
Money (annual variation in %)
Inflation Rate (CPI, annual variation in %)
Policy Interest Rate (%)0.751.001.752.752.25
Exchange Rate (vs USD)0.380.380.380.380.38
Exchange Rate (vs USD, aop)0.380.380.380.380.38
Current Account (% of GDP)-2.4-4.6-4.1-6.4-2.1
Current Account Balance (USD bn)-0.8-1.5-1.4-2.4-0.8
Trade Balance (USD billion)0.8-0.8-0.5-1.10.9
Exports (USD billion)16.512.815.518.018.1
Imports (USD billion)15.713.616.019.017.2
Exports (annual variation in %)-29.6-22.721.416.20.5
Imports (annual variation in %)-20.6-13.518.318.8-9.6
International Reserves (USD)

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Bahrain Facts

Value Change Date
Exchange Rate0.380.03 %Jan 01

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