Non-oil sector 'to drive Bahrain economy'
Manama, May 12, 2014
Bahrain's non-oil sector is well positioned for growth this year, powered by the launch of infrastructure projects worth $4.43 billion, according to the country's Economic Development Board (EDB).
In the first Bahrain Economic Quarterly (BEQ) for this year, the EDB said it expects non-oil growth to accelerate to more than four per cent this year and even as the oil sector is likely to remain more or less flat, headline GDP growth should come in at 3.5-4 per cent, reported the Gulf Daily News, our sister publication.
The EDB's current estimate is 3.7 per cent, the report added.
Citing finance ministry reports, the EDB said a number of infrastructure projects which were approved by the Gulf Development Fund are due to be launched in the coming months.
Government expenditure for this year is expected to be more robust compared to last year.
Due to delay in incremental government spending, the annual growth rate of the government services sector in the national accounts slowed down sharply last year, said the report.
The BEQ also highlights expectations of further growth in key sectors such as infrastructure, with predictions of increasing momentum in the coming months.
The growth forecast will have a marked positive impact on contractors' confidence and increased bank credit growth. The banking sector's liquidity and low loan-to-deposit ratios, have also led to the acceleration of project development and improved confidence levels.
According to latest official estimates, which the EDB reviews in a separate update than the BEQ, the real GDP growth rate last year was 5.3 per cent, supported by a robust 15.3 per cent expansion in the hydrocarbons sector, and growth of just over 3 per cent in non-oil sectors.
The hydrocarbons sector is expected to experience a year of stability this year as the main offshore Abu Sa'afah oilfield looks likely to remain at full capacity.
As a result of various pilot projects being evaluated, stable production from the onshore Bahrain field is likely to result in a modest contribution from the hydrocarbons sector to GDP growth this year.
According to the BEQ, the EDB has attracted approximately $114 million of foreign investment last year from North America, Europe and Asia, 12 per cent more than in 2012.
Last year alone, 35 foreign companies established business in Bahrain, creating more than 800 jobs in financial services, logistics, manufacturing, healthcare, technology and ICT sectors.
The report also highlighted the positive growth of the labour market in Bahrain, where private sector employment went up by 5.2 per cent in the third quarter last year, reflecting a recovering economy in labour driven sectors and an improvement in labour market conditions.
At the same time, official rates for unemployment have decreased from 4.5 per cent in November, to 4.3 per cent in December.-TradeArabia News Service