Bahrain Economic Outlook
November 30, 2021Conditions 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 GrowthEconomic 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
5 years of Bahrain economic forecasts for more than 30 economic indicators.
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