Bahrain Economic Outlook

October 2, 2018

The Bahraini economy rebounded in Q2 chiefly on the back of the non-oil sector, while the oil economy only expanded at a meager rate. The external position remains a worry, however, despite a recovery in international reserves in August on higher oil prices. This should ease market fears over Bahrain’s ability to meet its debt repayments and reduce currency pressures; nevertheless, a sustained improvement in investor sentiment will depend on the details of the Gulf Cooperation Council (GCC) aid package announced in late June. Meanwhile, on the political front, it was announced in late September that Bahrain will hold parliamentary elections in November.

Bahrain Economic Growth

Higher oil prices and the construction sector should buttress the economy in H2 and next year, while a financial assistance package from GCC neighbors should shore up weak public finances. However, fragile macroeconomic fundamentals remain a downside risk. FocusEconomics panelists expect GDP to grow 2.5% in 2018 and 2.8% in 2019, down 0.1 percentage points from last month’s forecast.

Bahrain Economy Data

	2013	2014	2015	2016	2017
Population (million)	1.3	1.3	1.4	1.4	1.5
GDP per capita (USD)	25,900	25,319	22,658	22,498	24,232
GDP (USD bn)	32.5	33.3	31.1	32.1	35.2
Economic Growth (GDP, annual variation in %)	5.4	4.4	2.9	3.2	3.9
Consumption (annual variation in %)	9.9	-0.7	1.9	0.5	-
Investment (annual variation in %)	16.9	5.9	-8.5	11.0	-
Unemployment Rate	4.3	4.1	4.2	4.3	-
Fiscal Balance (% of GDP)	-3.3	-3.6	-13.0	-13.6	-11.0
Public Debt (% of GDP)	41.3	42.0	60.3	72.1	79.8
Money (annual variation in %)	8.2	6.5	2.9	1.2	4.2
Inflation Rate (CPI, annual variation in %)	3.2	2.7	1.8	2.8	1.4
Policy Interest Rate (%)	0.50	0.50	0.75	1.00	1.75
Exchange Rate (vs USD)	0.38	0.38	0.38	0.38	0.38
Exchange Rate (vs USD, aop)	0.38	0.38	0.38	0.38	0.38
Current Account (% of GDP)	7.4	4.6	-2.4	-4.6	-3.9
Current Account Balance (USD bn)	2.4	1.5	-0.8	-1.5	-1.4
Trade Balance (USD billion)	4.3	3.7	0.8	-0.8	-0.7
Exports (USD billion)	25.5	23.4	16.5	12.8	15.3
Imports (USD billion)	21.2	19.7	15.7	13.6	16.0
Exports (annual variation in %)	10.9	-8.2	-29.6	-22.7	20.2
Imports (annual variation in %)	8.0	-7.0	-20.6	-13.5	18.3
International Reserves (USD)	5.0	5.8	3.1	2.2	2.3

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Bahrain Facts

	Value	Change	Date
Exchange Rate	0.38	0.03 %	Oct 12
Stock Market	1,316	0.04 %	Oct 12

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