After several difficult years, this is an exciting moment for the Bahraini economy, as high oil prices combine with a strong economic rebound.
Bahrain’s Finance Minister Sheikh Salman bin Khalifa Al Khalifa, speaking at the World Economic Forum in Davos, has predicted significant improvements for Bahrain’s budgetary position over the coming year, with the aim of the Kingdom balancing its fiscal budget by 2024.
“I’m optimistic about hitting the fiscal balance plan ahead of schedule,” the Finance Minister told delegates, adding: “Higher oil is one part of that. The other is we are seeing economic growth coming back strongly, and non-oil revenue is an increasing part of our revenue mix.”
He meanwhile noted the significant progress the country had made in diversifying its economy away from dependence on oil.
The Bahraini economy in 2021 saw estimated growth at 2.2%, which was largely driven by the non-oil sector, which grew by 2.8% over the year. Hence, significantly stronger growth is predicted for 2022 when the surge in oil prices is factored in.
The Kingdom’s successful response to the challenges of Coronavirus also allowed for a rapid economic rebound.
Moody’s Investors Service has also recently upgraded the kingdom’s economic outlook to “stable”.
These developments coincided with a visit to Bahrain by a delegation from the International Monetary Fund (IMF). The Bahrain Association of Banks (BAB) took this as an opportunity to showcase the Kingdom’s economic aspirations.
BAB CEO Dr Waheed Al-Qassim told delegates: “The Bahraini economy has many unique qualities, including being one of the most diverse in the region, with a higher share of GDP from the service and manufacturing sectors, a low level of inflation, and an interest rate environment that encourages business operating conditions.”
Meanwhile, the Bahrain Chamber of Commerce is capitalising on these advancements to develop a new investment policy aiming to “strengthen the national economy, create new jobs for Bahrainis, promote technological change and adhere to the state’s general strategy for economic development”.
The new draft law aims to both stimulate investment and protect investors, while also considering new legislation which can facilitate these goals.
These efforts seek to implement the kingdom’s economic Vision 2030 by creating an amenable environment for local and foreign investment while encouraging economic diversity.