Bahrain real GDP growth reaches 4.5% in 2014

Bahrain’s real GDP growth reached 4.5 percent in 2014, according to the latest Bahrain Economic Quarterly (BEQ) issued by the Bahrain Economic Development Board (EDB). The report also highlighted that nonoil sectors rose markedly from the 3 percent rate recorded in 2013 to 4.9 percent in 2014.
Strong growth of 12.5 percent 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 has been a strong performer throughout 2014 having seen an overall expansion rate of 9.9 percent 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 in 2014.
Growth in the financial services sector reached 3.4 percent year on year in 2014 in a marked acceleration from the 2.3 percent 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 percent.
Even as the pickup in growth was above all due to the clear acceleration in the nonoil space, also the hydrocarbons sector saw stronger growth than originally expected, expanding by 3 percent during the year.
Jarmo Kotilaine, chief economist at the EDB, said: “The report highlights the steadily growing contribution of the nonoil sector to the Kingdom’s economy. The fact that 80 percent 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.”
The report projects that real GDP growth will be around the 4 percent mark over the coming two years, despite the challenging macroeconomic environment.
In October 2014, it was announced that $22 billion would be invested in infrastructure projects in Bahrain over the next four years, including the Bahrain International Airport modernization project and expansion of Alba’s operations, already among the world’s largest primary aluminum smelters as well as other sectors, including housing and education.
In line with that, the report projected healthy growth in the GCC economy with the nonoil sector continuing its momentum.