April 26, 2015
Manama, Economic Development Board, 26th April 2015: Bahrain’s real GDP growth reached 4.5% in 2014 according to the latest Bahrain Economic Quarterly (BEQ) issued by the Bahrain Economic Development Board (EDB). The report also highlighted that non-oil sectors rose markedly from the 3.0% rate recorded in 2013 to 4.9% in 2014.
Strong growth of 12.5% year on year was reported in the construction sector following the initiation of a number of major infrastructure projects in areas such as road transportation.
The hotels and restaurants sector has been a strong performer throughout 2014 having seen an overall expansion rate of 9.9% year on year. The sector benefited from a continued increase in visitor numbers to unprecedented levels. Partly in response, it has also seen significant expansion in capacity, with several new establishments opening in 2014.
Growth in the financial services sector reached 3.4% year on year in 2014 in a marked acceleration from the 2.3% pace recorded in 2013. The report further suggested that the retail-banking sector is in a position to accelerate lending due to high liquidity as loan-to-deposit ratios are less than 50%.
Even as the pick-up in growth was above all due to the clear acceleration in the non-oil space, also the hydrocarbons sector saw stronger growth than originally expected, expanding by 3.0% during the year.
Dr. Jarmo Kotilaine, Chief Economist at the EDB said: “The report highlights the steadily growing contribution of the non-oil sector to the Kingdom’s economy. The fact that 80% of Bahrain’s GDP, now comes from areas other than hydrocarbons highlights the transformative impact of the reform efforts to diversify the economy in past years. We expect project spending on infrastructure, tourism, and increased private sector activity to drive non-hydrocarbon growth much further and offset to a large extent the impact of any decline in revenues from oil.”
The report projects that real GDP growth will be around the 4.0% mark over the coming two years, despite the challenging macroeconomic environment.
In October 2014 it was announced that US$22 billion would be invested in infrastructure projects in Bahrain over the next four years, including the Bahrain International Airport modernisation project and expansion of Alba’s operations, already among the world’s largest primary aluminium smelters as well as other sectors including housing and education.
In line with that, the report projected healthy growth in the GCC economy with the non-oil sector continuing its momentum.
The full report can be downloaded from the link: BEQ Report