Bahrain Foreign Direct Investment (USD bn)

Although partly driven by a more unfavorable base effect, annual economic growth should have softened further in the last three months of 2022. Higher interest rates will have dampened domestic demand. That said, slightly softer inflation in the final three months of the year likely provided some breathing room to households’ budgets. Moving to 2023, available data is mixed. The value of domestic-origin merchandise exports slid by 8.0% year on year in January. Conversely, goods imports grew an annual 4.0% in the same month, widening the trade deficit further. In other news, the government plans to double the anti-inflation allowance for households during the holy month of Ramadan—starting in late March—which should boost private spending.