Bahrain Economic Outlook

January 14, 2020

Economic growth accelerated in the third quarter, after slowing to a near standstill in Q2, although it remained downbeat by historical standards. A strong expansion in the transport and communication, and manufacturing sectors, which collectively account for around one-fifth of total output, supported Q3’s acceleration. However, oil and gas production, which also accounts for around one-fifth of output, dropped off slightly as Bahrain continued to comply with OPEC+ production cuts. Turning to Q4, the economy likely remained deflated, as suggested by continued compliance with OPEC+ production curbs through November. However, upbeat point-of-sale transactions in October suggest the non-oil private sector will continue to pick up the slack. In other news, the government recently announced a sharp reduction in visa prices, effective from January, in a bid to boost tourism.

Bahrain Economic Growth

Growth should accelerate this year as low interest rates will support private consumption growth, while healthy inbound tourism should also stoke activity. However, weighing on the outlook are poor public finances, which constrain government expenditure, continued OPEC+ production cuts and regional geopolitical instability. FocusEconomics analysts expect growth of 1.8% in 2020, which is down 0.2 percentage points from last month’s forecast, and 2.1% in 2021.

Bahrain Economy Data

	2014	2015	2016	2017	2018
Population (million)	1.3	1.3	1.4	1.4	1.5
GDP per capita (USD)	25,900	25,321	22,700	22,610	24,243
GDP (USD bn)	32.5	33.3	31.1	32.2	35.2
Economic Growth (GDP, annual variation in %)	5.4	4.4	2.9	3.5	3.8
Consumption (annual variation in %)	-	-	-	-	-
Investment (annual variation in %)	16.9	5.9	-8.5	10.8	11.0
Unemployment Rate	4.3	3.8	3.5	4.3	-
Fiscal Balance (% of GDP)	-3.3	-3.6	-13.0	-13.4	-10.1
Public Debt (% of GDP)	41.7	42.6	60.3	71.7	79.8
Money (annual variation in %)	8.2	6.5	2.9	1.2	4.2
Inflation Rate (CPI, annual variation in %)	3.3	2.7	1.9	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	-3.8
Current Account Balance (USD bn)	2.4	1.5	-0.8	-1.5	-1.3
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	5.7	3.1	2.2	2.3

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Bahrain Facts

	Value	Change	Date
Exchange Rate	0.38	0.03 %	Jan 01

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