Bahrain economy posted solid growth in 2011
Manama, May 22, 2012
Bahrain’s economy continued to grow during 2011 with its annual real output expanding by 2.2 per cent, up over the previous estimate of 1.5 per cent growth, according to a report.
The main boost to the Kingdom's economy was by a faster-than-expected recovery in the second half of the year, said the Bahrain Economic Development Board (EDB) in its quarterly report this week, which looks into the key economic indicators of Kingdom for the fourth quarter of 2011 and first quarter of 2012.
The report draws on statistics from the Central Informatics Organization and indicated that after a sharp fall in the output in Q1 2011 due to unrest, it was back to its previous level in Q3 and grew by 3.2 per cent in Q4 compared to the same period a year earlier.
The fastest growing sector in 2011 was transport and communication which soared 11 per cent for the year, particularly significant as it is a large contributor to the economy, accounting for almost 10 per cent of Gross Domestic Product (GDP).
The other large sectors experienced significant growth, including Government Services at 5.6 per cent, Downstream Manufacturing at 3.9 per cent, Finance Services at 2.6 per cent and Mining and Quarrying (mostly crude oil output) at 3.2 per cent.
The hotels and restaurants sector was hardest hit in 2011, although it showed significant recovery throughout 2011 following a difficult first half to the year, the report stated.
Kamal bin Ahmed, Minister of Transportation and Acting Chief Executive of the Bahrain EDB said: “These figures are a positive signal that Bahrain’s economy is rebounding from the impact of last year and that government measures to boost growth are taking effect.'
'We are confident that as the recovery continues, the economy will return towards its normal growth levels,' he noted.
The report also pointed out that the consumer price index fell by 2.1 per cent in March 2011 compared to the same quarter a year earlier. Overall prices remained subdued beyond March, returning to pre-unrest levels in October 2011.
According to the report, GDP growth is expected to continue to rebound towards historic levels during 2012 as increases in crude oil production, manufacturing and government spending driving expected economic growth of 4-5 per cent.
While a fall in private sector demand and oversupply of commercial properties has slowed construction, government spending is projected to compensate and fuel construction for infrastructure, social housing and other social spending projects such as schools and hospitals.
The budgeted $10 billion 10-year GCC fund is likely to be dedicated to projects such as these, in addition to already planned spending by the Government.
The increase in oil output and high oil prices is also expected to produce large current account surpluses, the EDB report stated.
During 2011, the EDB attracted over $300 million in new foreign investment, primarily in banking and manufacturing, with over twenty new companies establishing operations in Bahrain, including German chemical giant, BASF; Geneva-based asset managers, Notz Stucki; Canara Bank and JBF Industries from India, and global law firm, DLA Piper.-TradeArabia News Service