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Bahrain real GDP to grow at 4pc, despite challenges

MANAMA, April 27, 2015

Bahrain's real GDP growth is projected to be around four per cent mark over the coming two years, despite the challenging macroeconomic environment, according to an Economic Development Board (EDB) report.

The latest Bahrain Economic Quarterly issued by EDB says in October last year it was announced that $22 billion would be invested in infrastructure projects in the kingdom over the next four years, including the Bahrain International Airport modernisation project and expansion of Alba, already among the world's largest primary aluminium smelters, as well as other sectors like housing and education.

In line with that, the report sees healthy growth in the GCC economy with the non-oil sector continuing its momentum, said a report in the Gulf Daily News (GDN), our sister publication.

According to the report, real GDP growth last year was 4.5 per cent.

The report also highlighted that non-oil sectors rose markedly from the three per cent rate recorded in 2013 to 4.9 per cent last year.

Strong growth of 12.5 per cent year-on-year was reported in the construction sector following the initiation of a number of major infrastructure projects in areas such as road transportation.

The hotels and restaurants sector was a strong performer throughout the year having seen an overall expansion rate of 9.9 per cent year-on-year.

The sector benefited from a continued increase in visitor numbers to unprecedented levels.

Partly in response, it has also seen significant expansion in capacity, with several new establishments opening last year.

Growth in the financial services sector reached 3.4 per cent year-on-year last year in a marked acceleration from the 2.3 per cent pace recorded in 2013.

The report further suggested that the retail-banking sector is in a position to accelerate lending due to high liquidity as loan-to-deposit ratios are less than 50 per cent.

Even as the pick-up in growth was above all due to the clear acceleration in the non-oil space, the hydrocarbons sector also saw stronger growth than originally expected, expanding by three per cent during the year.

“The report highlights the steadily growing contribution of the non-oil sector to the kingdom's economy,” EDB chief economist Dr Jarmo Kotilaine said.

“The fact that 80 per cent of Bahrain's GDP now comes from areas other than hydrocarbons highlights the transformative impact of the reform efforts to diversify the economy in past years.

“We expect project spending on infrastructure, tourism, and increased private sector activity to drive non-hydrocarbon growth much further and offset to a large extent the impact of any decline in revenues from oil,” he added. - TradeArabia News Service




Tags: Bahrain | economic | growth |

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