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Bahrain Economic Quarterly - March 2017

The continued resilience of the non-oil economy allowed Bahrain to achieve a slight improvement in its headline growth in 2016 in spite of historically subdued GDP figures in the region. The near-term outlook remains one of relative continuity.
 
  • The Bahraini economy expanded by 3% in 2016. This marked a slight acceleration over the 2.9% pace posted in 2015 and was achieved thanks to stronger momentum in the non-oil sector. By contrast, oil sector GDP came in flat as a result of a Q4 drop in output due to seasonal maintenance 

 

  • Non-oil momentum drivers point to relative continuity. Even as ongoing region-wide fiscal consolidation will somewhat dampen Bahrain’s growth momentum, the ongoing implementation of the infrastructure pipeline will serve as a strong countervailing force. Major projects such as Alba Line 6, the airport expansion, and the LNG terminal will support activity across the non-oil economy 

 

  • Regional non-oil growth set to accelerate. Even though regional growth will be depressed by slower growth in the oil sector (due to the OPEC quotas), the non-oil economy is showing encouraging signs of adjusting to the new economic realities. Business confidence has generally strengthened across the region and should further benefit from a more positive oil price outlook, even allowing for bouts of volatility

 

  • A slightly brighter global outlook. After a long period of record low interest rates and subdued growth, the outlook for the global economy has become somewhat brighter. A combination of pro-growth policies in the US and stimulus measures in China are among the main factors underpinning this optimism. However, structural weaknesses still entails risks concerning the pace and magnitude of this recovery
     

Bahrain economic outlook

 
2016
2017f
2018f
2019f
Real GDP growth, %
3.0%
2.5%
2.4%
2.2%
Non-hydrocarbons sector
3.7%
3.2%
3.9%
2.8%
Hydrocarbons sector
-0.1%
-0.1%
0.0%
0.0%
Nominal GDP growth, %
2.4%
6.8%
6.0%
5.1%
Inflation (CPI %)
2.8%
1.8%
3.0%
3.0%
Current account (% of GDP)
-4.6%
-3.8%
-3.8%
-3.8%
Fiscal balance (% of GDP)
-13.0%
-8.8%
-7.4%
-6.4%
Crude Oil Arabian Medium (USD)
43
52
55
55
Source: Bahrain Economic Development Board

  

 

 BEQ March 2017

 

The continued resilience of the non-oil economy allowed Bahrain to achieve a slight improvement in its headline growth in 2016 in spite of historically subdued GDP figures in the region. The near-term outlook remains one of relative continuity.

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