MANAMA: Bahrain was the fastest growing economy in the GCC through last year with real GDP growth of 3.9 per cent and non-oil economy expanding by 5pc, shows the latest assessment of the Economic Development Board (EDB).
Data published in the EDB’s latest Bahrain Economic Quarterly (BEQ) reveals that the pace of growth in the kingdom “accelerated markedly” in 2017 compared to 3.2pc in 2016.
This strong performance in the face of sluggish regional growth was driven by broad-based success across the highly-diversified non-oil private sector, led by tourism, a strong pipeline of infrastructure projects, and a record year for foreign direct investment.
Earlier this month, the IMF’s World Economic Outlook forecast that Bahrain’s economy would continue to be the fastest growing economy in the GCC this year, suggesting momentum is expecting to be maintained into the current year.
Regionally, the BEQ predicts a significantly brighter outlook for the GCC in 2018, with a pronounced pick-up expected as economic diversification and fiscal consolidation efforts transition to their next phase and create a broad revenue base across the non-oil economy.
Commenting on the findings of the report, EDB chief economist Dr Jarmo Kotilaine told a media roundtable at the EDB’s headquarters yesterday that Bahrain’s economic resilience aligns with broader regional and global trends in which more diversified economies are seen tending to achieve faster growth.
“Region-wide, business confidence and growth momentum are set to benefit from a more benign outlook in the oil sector and we expect 2018 to mark an important milestone as the GCC’s makes the economic paradigm shift towards diversified private-sector led growth economies,” he added.
Growth in Bahrain is being driven by a variety of strongly performing industries, led by tourism with the hotels and restaurants sector expanding by 9.5pc in 2017, total visitor expenditure rising by 8.9pc and the average length of stay increasing 2.5pc to 2.82 days, in line with the government’s strategy to boost the sector and encourage longer stays from existing visitors.
Other high performing sectors last year included social and personal services (9.4pc), led by private education and healthcare, trade (8.5pc), real estate and professional services (5.5pc) and financial services (5pc).
The GCC Development Programme has seen a steady escalation of activity with tendered projects at $4.8 billion (cumulative) in the first quarter this year. This was up 22pc in YoY terms.
The value of projects that had commenced rose by 10.7pc to $3.6bn, whereas the aggregate cash flow increased by 76.9pc to $1.5bn.
On the Bahrain Bourse, the best performing index in first quarter this year was services which posted 1.8pc year-to-date gain.
Commercial banks advanced by 0.7pc and insurance by 0.2pc.
All other indices lost ground, led by last year’s star performer, the industrial index which shed 8.8pc.
Inflation as measured by the consumer price index in January-February this year was 2.9pc. The annual rate reached 3.8pc in February. Price pressures were caused by the excise duty and higher fuel prices.
Food prices were up 3.8pc, partly as a result of relative dollar weakness. By contrast, housing costs rose by only 1.1pc.
Additionally, the EDB, which is a semi-autonomous agency formulating Bahrain’s future economic development strategy, attracted BD276 million of foreign direct investment into the country in 2017, an all-time record for it.
This represents an increase of 161pc from 2016, and is expected to generate 2,800 jobs over the next three years.
The success of private sector industries across the Bahraini ecosystem supports the widespread recognition the kingdom enjoys as a regional pioneer of economic diversification thanks to sustained efforts to improve the business and regulatory environment.
This process continued apace last year, with data suggesting the oil and gas sector now accounts for only 18.4pc of Bahrain’s real GDP, compared with 43.6pc in 2000.
avinash@gdn.com.bh
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