Bahrain Economic Forecast

Bahrain Economic Outlook

November 28, 2017

The economy’s non-oil sector was robust in H1, expanding 4.7% from a year earlier thanks to stellar performances in the hotels & restaurants, social & personal services and financial services sectors. Business sentiment improved in Q2, and tourist arrivals rose sharply through Q3. This relative dynamism contrasts with the oil sector, which continues to drag on growth due to the impact of OPEC production cuts, although the recent uptick in crude prices should provide some relief. The cavernous budget deficit and shaky external position remain a serious concern, and reportedly led Bahrain to recently approach Gulf allies for financial assistance. Although international reserves rose in September following a bond sale, they remain low and are likely to come under renewed pressure going forward, which could increase doubts over the sustainability of the dollar peg.

Bahrain Economic Growth

Growth should pick up next year thanks to greater oil production and strong infrastructure spending, with projects including the Alba Line 6 expansion and a new LNG terminal underway. However, ongoing fiscal consolidation will drag on growth. FocusEconomics panelists expect GDP to grow 2.7% in 2018, unchanged from last month’s estimate, and 2.6% in 2019.

Bahrain Economy Data

20122013201420152016
Population (million)1.21.21.31.31.3
GDP per capita (USD)25,15426,10926,25823,98824,067
GDP (USD bn)30.732.533.331.131.8
Economic Growth (GDP, annual variation in %)3.75.44.42.93.0
Consumption (annual variation in %)1.19.9-0.71.9-  
Investment (annual variation in %)9.816.95.9-12.1-  
Unemployment Rate3.94.34.14.2-  
Fiscal Balance (% of GDP)-2.0-3.3-3.6-13.0-13.0
Public Debt (% of GDP)33.641.342.060.372.8
Money (annual variation in %)4.18.26.54.82.4
Inflation Rate (CPI, annual variation in %)2.83.32.71.82.8
Policy Interest Rate (%)0.500.500.500.751.00
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)8.47.44.6-2.4-4.7
Current Account Balance (USD bn)2.62.41.5-0.8-1.5
Trade Balance (USD billion)6.57.37.40.8-0.8
Exports (USD billion)19.720.920.716.512.8
Imports (USD billion)13.213.613.315.713.6
Exports (annual variation in %)0.56.1-1.0-29.6-22.7
Imports (annual variation in %)9.13.0-2.2-20.6-13.5
International Reserves (USD)5.25.35.23.12.2

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Bahrain Facts

ValueChangeDate
Exchange Rate0.380.03 %Dec 06
Stock Market1,2650.04 %Dec 06

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