Bahrain’s Real GDP Records 2.4% growth in Q2

Wednesday 31 October 2018
Manama - MENA Herald:

Bahrain’s headline real growth rate increased sharply in the second quarter of 2018 to an annual rate of 2.4%. The data published in the Bahrain Economic Quarterly Report (BEQ), produced by the Bahrain Economic Development Board (EDB), shows a significant acceleration of growth from the previous quarter. This rebound was underpinned by both the normalisation of oil production and markedly faster non-oil growth.

In spite of the improvement, the BEQ noted the ongoing regional economic recovery is progressing somewhat more slowly than initially expected. While GCC growth is expected to accelerate to 2.5% this year and 3% in 2019, this is clearly below historical levels. Business confidence has varied month to month while the growth of the non-oil sector has proved less pronounced that the expansion in the oil sector. This has prompted a number of Governments to initiate economic stimulus programmes after a period of fiscal retrenchment.

Dr Jarmo Kotilaine, Chief Economist, Bahrain EDB, commented: “Bahrain’s impressive improvement in the second quarter was thanks to a broad-based recovery across the whole economy. In particular, the expansion of Bahrain’s non-oil GDP stands out in the regional context. With the oil industry now only accounting for less than 20% of Bahrain's GDP, growth dynamics are critically linked to non-oil drivers. This compares to the situation in much of the rest of the region where the stronger growth has been led by higher oil prices and production.”

As regional growth picks up, the BEQ also predicted that renewed regional spending power will drive growth in cross-border tourism. Indeed, the Bahraini tourism industry continues to grow across a broad range of metrics. Visitor numbers are up 5.8% year-on-year and the average number of nights spent in Bahrain per visitor jumped by 16%

According to the quarterly report, Bahrain’s non-oil GDP expanded by an annual 2.8% in the second quarter, driven by the construction (up 6.7%) and manufacturing sectors (up 4.5%). The ongoing expansion in the construction sector is illustrated by the total sum of infrastructure projects in Bahrain reaching US$87.3 billion in mid-September according to MEED Projects, a 3.8% year-on-year growth. A number of strategic projects are making headway. For instance, the cumulative total of active infrastructure investments funded by the GCC Development Fund attained US$3.7 billion in the third quarter, which is an increase of 12.7% on 2017. With the recent build-up in tendered projects, this figure is set to grow further at an accelerating pace in the near term.

The total value of foreign direct investment is continuing to increase at a brisk pace. The total value of projects facilitated by the EDB in the first nine months of 2018 was 138% higher than a year earlier. Of the companies attracted by the EDB in the first three quarters of 2018, 31 out of the 76 companies fall in the manufacturing sector, highlighting the sector’s strength and the Kingdom’s ideal geographic position as a gateway to the Gulf.

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