EDB: Bahrain's economy continues to grow

The report estimates that Bahrain's annual real output continued to grow during 2011, expanding by 2.2%. This exceeded the previous estimate of 1.5% growth as the economy boosted was by a faster than expected recovery in the second half of the year. The report draws on statistics from the Central Informatics Organisation and indicates that after a sharp fall in the output in Q1 2011 due to unrest, output returned to its previous level in Q3 and grew by 3.2% in Q4 compared to the same period a year earlier.

The fastest growing sector in 2011 was transport and communication at 11% growth for the year, particularly significant as it is a large contributor to the economy, accounting for almost 10% of Gross Domestic Product (GDP). Other large sectors experienced significant growth, including government services at 5.6%, downstream manufacturing at 3.9%, finance services at 2.6% and mining and quarrying (mostly crude oil output) at 3.2%. 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.

Kamal bin Ahmed, Minister of Transportation and Acting Chief Executive of the Bahrain Economic Development Board, 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." The Consumer Price Index fell by 2.1% 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%.

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 US$10 billion 10-year GCC fund is likely to be dedicated to projects such as the above mentioned, 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. During 2011, the EDB attracted over US$300 million in new foreign investment, primarily in banking and manufacturing, with over 20 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.