The Economy
Since the wave of popular protests engulfed the Gulf kingdom in 2011, it has struggled on the path to economic recovery. In January 2009, the Gulf Co-operation Councils (GCC) smallest state became the blocs first to see its sovereign ratings outlook cut when the credit crunch hit the Gulf, leading to concerns about its ability to handle the global downturn. However, earlier this year, ratings agency Standard & Poors removed Bahrain from its credit watch, stating the country was on its way back to economic stability. Bahrains Economic Development Board (EDB) is optimistic about growth, forecasting an expansion of gross domestic product (GDP) of six per cent this year. The growth is credited to resumption of normal output from the Abu Safa oil fields, which remained low for most of last year. Despite diversification efforts, oil still accounts for more than 80 per cent of government income. Banking, which accounts for 20 per cent of GDP, is being tested by ongoing political and economic uncertainty. Following the 2011 unrest, a Saudi-led aid plan has offered Manama a package of $1 billion a year for the next 10 years for housing and infrastructure, taking some capital investment burden off the governments shoulders.
Politics
Calls for a union with other GCC states, particularly its powerful neighbour Saudi Arabia, received publicity last year as the kingdom sought a response to ongoing unrest since February 2011. Anti-government protests had led to the declaration of martial law and the entry of military forces from the GCC Peninsula Shield in March 2011. A resolution between the government and opposition groups has still not been reached, while a second round of the National Dialogue continues. The second anniversary of protests in March 2013 saw more clashes, deaths and arson attacks across the country. The Formula One Grand Prix, which has become a rallying point for anti-government protesters, passed off relatively peacefully. King Hamad has pledged to implement further reforms in light of an independent commission of inquiry established in 2011 to investigate events related to the unrest.
| Sovereign ratings | ||
| Standard & Poors | BBB/A2 | Stable |
| Moodys | Baa1 | Negative |
| Fitch Ratings | BBB | Stable |
