Saturday 26 May 2018

Bahrain non-oil growth will pick up this year: IMF

Manama, March 26, 2014

Bahrain's non-oil GDP growth is projected to pick up to about 5 per cent in 2014 driven by capital spending, with oil GDP expected to be flat, an International Monetary Fund mission said.

Overall growth is projected to revert to moderate levels in the medium term of around 3 percent, reflecting continued weak investment sentiment in the non-oil sector and limited growth in the oil sector, said an IMF statement following the visit of the mission led by May Khamis, which was in Manama from March 9–19.

“Economic performance remained moderate in 2013. GDP is estimated to have grown by 4.9 percent, supported by a rebound in the hydrocarbons sector, but non-oil activity is estimated to have slowed to 2.8 percent, largely reflecting weak investment sentiment and the delay in the 2013–14 budget approval," it said.
Fiscal adjustment must be a priority and the state budget deficit is expected to continue to rise in the medium term, it said.

"Without additional fiscal measures, government debt is projected to increase and become an important source of vulnerability to the economy in the medium term," the mission warned.

A gradual retargeting of subsidies to the lower-income segments of the population, and controlling the growth of other current spending (the public sector wage bill and goods and services) would help stabilise debt in the medium term. Capital expenditures should be preserved to limit the impact of fiscal consolidation on growth. Diversifying the sources of fiscal revenue is essential in the longer term to lower vulnerability to oil price shocks. Placing the pension fund on a more sustainable path is imperative," it added.
“The banking sector is in good health. The capitalization of the banking system is high on average, around 18 percent for retail banks and above 22 percent for wholesale banks. Nonperforming loans (NPLs) to gross loans have continued on a downward trajectory in conventional retail and wholesale banking, and now ranges between 5–7 percent. While the Islamic retail banking segment has been tackling high NPLs, capital buffers for this segment remain adequate—at about 17 percent—with NPLs falling to about 13 percent of gross loans. Bahrain has not been affected by the most recent bout of volatility in global financial markets,” said the mission. -TradeArabia News Service

Tags: Bahrain | GDP | growth | IMF |

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