Bahrain's economy is set to grow by 4.5 per cent this year and over 5 per cent next year, according to a leading private bank's top economist.

The main driver of GDP growth in the kingdom will be the oil sector, Standard Chartered Bank's global head of macro research Marios Maratheftis was quoted as saying in a report published by the Gulf Daily News, our sister publication.

"The growth percentage reflects a revival of oil production after a dip last year due to technical disruptions at the Abu Sa'afa field and slower output onshore.

"It is also partly because of a low base effect," Maratheftis said in at a media briefing yesterday.

The briefing took place on the sidelines of a talk titled: "Transforming, Rebalancing, and Outperforming" held by the bank for its corporate clients.

"Bahrain has access to international markets and another factor that works in favour of the country is that there is good appetite for its debt. In a low interest rate regime, the demand for Bahraini paper (government bonds), will be good.

"The stability of GCC countries' economies, while many European countries continue to face a worsening economic situation, will continue to attract investment and trade prospects.

"The GCC region as a whole will continue to benefit from rising export volumes and high oil prices. Strong bank lending, especially in Saudi Arabia, on the back of corporate and infrastructure growth will help expand revenues of banks," he added.

"The Mena region is changing rapidly. Countries which have financial and physical resources and are backed by governments willing and able to implement spending and investment plans are outperforming in 2013," he said.

Maratheftis said the world was becoming multi-polar.

"The industrial revolution underway in China is unparalleled in size and scope. As the Asian giant becomes a more dominant economy, its currency the yuan, also known as renminbi (RMB), is emerging as an alternative global reserve currency.

"This is now an irreversible trend. There has been a rapid increase in the usage of RMB in trade settlements, deposits and currency transactions. The use of the currency is up by over 60 per cent," he noted.

"Meanwhile, rising new trade corridors, with increased trade between Asia, Africa, the Middle East and Latin America, and increased investment, innovation and infrastructure spending, are adding new sources of growth in the emerging world.

"The euro remains fundamentally flawed. Unlike what most European governments and policymakers insist, the problem in EU is not one of fiscal deficits but of trade deficits.

"In the euro zone, South Europe is uncompetitive as compared to Germany but it has the same currency," he said. "The only solution is for the German government to go inflationary expansion for the next few years, which would reduce the imbalance," he added. – TradeArabia News Service