Bahrain set to achieve 5pc economic growth this year

MANAMA: Bahrain’s economy is seen growing at five per cent this year, substantially higher than the 3.1pc rate recorded last year.

The Finance and National Economy Ministry’s Bahrain Economic Quarterly report for Q3 2019 has forecast nominal GDP (Gross Domestic Product) growth of 5pc for 2020.

The report, based on data from the Information and eGovernment Authority (iGA), is projecting continued resilience of the non-oil sector, which is seen growing at 3.1pc this year in real terms, significantly higher than 2.3pc during the last two years.

While the nominal rate measures growth at current market prices, the real or headline rate makes adjustments for the effects of price inflation.

The report which primarily reviews national economic performance for the period from July to September (Q3) last year, found headline growth in the quarter rebounded markedly to 1.6pc from the soft spot observed in Q2.

This marked a sharp acceleration from the (revised) 0.3pc pace in Q2 and was entirely led by the non-oil sector.

The oil sector posted a small 0.1pc contraction whereas the non-oil sector grew by 2pc year-on-year (YoY).

The kingdom’s growth dynamics have been affected by the ongoing fiscal consolidation along with a region-wide period of historically moderate growth.

Growth during the first three quarters last year averaged an annual 1.4pc, a slight deceleration from the (revised) 1.7pc observed in 2018.

The non-oil growth rate was 1.2pc with weaker growth dynamics due to a reduction in the government headcount and minimal – 0.1pc YoY – growth in the oil sector.

Growth in Q3 was above all driven by a rebound in manufacturing.

The launch of Alba’s Line 6 pushed up the YoY growth rate in manufacturing to 4.1pc, while the hotels and restaurants sector continued to perform strongly with 6.3pc YoY growth.

Likewise, the transportation and communication sector saw its momentum accelerate to an annual 6.4pc.

According to the report, Bahrain’s unprecedented infrastructure project pipeline is continuing to make healthy progress.

Projects funded by the GCC Development Fund have seen continued increases during Q3 2019 with the cumulative total of tendered projects reaching $6.1 billion in a 6.3pc YoY increase.

During the quarter, Bahrain’s overall non-oil exports reached just over BD786.3 million, a 6.2pc increase over the same period in 2018.

The improvement was above all led by an increase in re-exports.

Business confidence in Bahrain has continued to show resilience in the face of the ongoing economic transition.

The Quarterly Business Perception Survey of the iGA suggests that most businesses in the country view the economic conditions as benign or neutral.

In terms of perceptions of the current situation, views have become somewhat more polarised in recent months with an increase in the share of optimists and pessimists alike.

In Q3, 28.9pc of respondents viewed the business conditions as favourable while a majority (52.7pc) were neutral.

About 18.3pc of respondents held an unfavourable view.

Forward-looking expectations have shown a broadly similar dynamic. Around two-fifths (41.8pc of respondents were optimistic regarding the outlook for Q4, whereas 46.6pc were neutral and 11.6pc held a negative view.

Overall growth in the GCC has remained stable and lower than expected in 2019 due to lower oil output as agreed by the OPEC+ members.

Saudi Arabia national accounts indicate GDP growth in Q3 2019 was 0.5pc YoY due primarily to a decline in the oil sector by 6.5pc.

Source: http://www.gdnonline.com/Details/725939