Non-oil sector to spearhead Bahrain growth
Manama, June 30, 2014
The pattern of growth in the kingdom looks likely to shift significantly this year, according to the Economic Development Board (EDB).
In its latest economic quarterly report, the EDB said the relative stability of the hydrocarbons sector will be contrasted with significant acceleration of growth in the non-oil sector thanks to the initiation of a number of infrastructure projects, reported the Gulf Daily News, our sister publication.
Increased activity in the construction sector will in turn stimulate other sectors, including manufacturing, finance, and retail.
Sound growth in private sector activity should also boost consumer and investor confidence and encourage bank lending, the report said.
It forecasts significant non-oil sector growth this year, aided by growing demand in the private sector.
While real GDP growth reached 5.3 per cent last year, the rate of growth of the non-oil economy is expected to accelerate from 3 per cent last year to roughly 4.4 per cent this year.
The robust growth last year was mainly due to normalisation in the hydrocarbons sectors where maintenance in the offshore Abu Saa'fa field had affected growth in 2012.
The oil sector is expected to remain mostly flat this year as production is anticipated to continue at full capacity, both offshore and from the onshore Bahrain field.
Oil sector growth is expected to be around 0.1 per cent this year and overall real GDP growth around 3.5 per cent.
"The investment in core infrastructure will not only drive growth, but also have much longer term economic and social benefits for Bahrain," Transportation Minister and EDB acting chief executive Kamal Ahmed said.
"Whilst growth from the oil sector will remain flat, there are also several significant projects underway.
"Overall the outlook is positive, both for this year and moving forward."
The initial focus of project spending will primarily be on housing, a priority area for the government.
To date, an estimated $3.4 billion worth of projects for housing, utilities, and education have been allocated over the coming three-year period.
Housing is expected to account for roughly half of the total expenditure, with plans for more than 5,000 housing units expected to be completed within the same time period.
These housing units are part of an ongoing plan by the Housing Ministry to build more than 15,000 housing units between 2014 and 2017, with a target of 40,000 housing units over the next 10 years.
The other main priority area is energy supply, as power demand in the kingdom has almost doubled over recent years, from 1,540 MW in 2003 to 2,967 MW in 2012.
Current capacity stands at 4,000 MW and it is expected that two 400-kW transmission stations will be tendered soon.
Efforts are also underway to further improve Bahrain's connectivity with the rest of the region.
The project of modernising and expanding the Bahrain International Airport, which should increase the airport's capacity from nine million to 13.5m passengers, is expected to start towards the end of this year.
The King Fahad Causeway Authority is reportedly planning to complete the Saudi-Bahrain rail study by September.
The project, which is expected to be completed within 7 to 10 years, is part of a larger GCC rail network anticipated to cost over $15bn.
Several visits took place during the first half to strengthen ties between Bahrain and significant economies where there is considerable potential for expanded commercial and investment relations, including Russia, Kazakhstan, Tajikistan, Pakistan and India.
The EDB has also organised a series of delegation visits from China and other target markets to familiarise foreign investors with the kingdom, and highlight the potential investment opportunities available to companies looking to expand into the fast-growing GCC market, which is currently worth over $1.5 trillion, and expected to reach $2 trillion by 2020.-TradeArabia News Service