Bahrain’s non-oil economy grew 4.7 per cent in the first half of the year, faster than the 4 per cent expansion in first six months of 2016, even as the kingdom continues fiscal consolidation in the wake of lower oil prices.
“The robust non-oil growth figures were almost entirely due to activity in the private sector, underscoring the strength of structural and countercyclical growth drivers in the Bahraini economy,” the Bahrain Economic Development Board (EDB) said in a quarterly economic report. “This positive momentum [which came] at a time of fiscal consolidation and minimal oil output growth, underscores the dynamism of the kingdom’s economy.”
Overall real economic growth in Bahrain, which is not a member of Opec, reached 3.4 per cent in the first half of the year, marking a small improvement over the 3.2 per cent pace of growth recorded for the entire 2016.
The growth was driven by a strong momentum in hotels and restaurants; social and personal services and the financial services sectors, which all expanded by more than 7 per cent year-on-year during the period. Transportation, communications and real estate sectors also posted positive momentum, according to EDB.
The country’s tourism industry is also growing steadily as the aggregate number of tourists visiting Bahrain during the first nine months of 2017 crosses 8.7 million, up 12.8 per cent from a year-earlier. With development projects worth approximately US$10 billion under construction across the kingdom, this trajectory is set to continue in the future. Bahrain has a pipeline of infrastructure projects worth over $32bn, according to EDB report.
“The fact that growth figures have once again surprised on the upsides attests to the exceptional strength of the countercyclical growth drivers in the Bahraini economy, notably the unprecedented project pipeline, led by major ventures such as the airport modernization,” Jarmo Kotilaine, chief economic advisor of the EDB said.
The non-oil economic growth, he said, has also benefited from structural reforms. The government, during the first half of this year, launched initiatives such as crowdfunding regulations, a regulatory sandbox for fintech companies and a Cloud First policy, have improved Bahrain’s business environment.
“Bahrain is successfully positioning itself at the forefront of innovation at a time when the growth prospects for the Gulf economies are becoming increasingly tied to productivity,” he noted.