Bahrains GDP shrinks 6.9% due to pandemic

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MANAMA: The coronavirus pandemic has significantly decreased the contribution of various economic sectors to the GDP of Bahrain last year, shows an assessment by the Bahrain Chamber for Commerce and Industry (BCCI).

In a report released yesterday on the economic repercussions of the Covid-19 crisis, Bahrain’s main business body said Covid-19-related restrictions continued to disrupt economic activity well into the third quarter last year, when partial resumption began in many sectors after nearly six-month-long closures.

Based on preliminary data from the Information and eGovernment Authority, the report found that in line with the global economic trend, Bahrain’s real GDP contracted by 6.9 per cent during the third quarter of 2020 when compared with Q3-2019.

The proportion of the transportation and communications sector contribution to the national GDP saw the highest decline of 41.43pc during the quarter when compared with the same period in 2019.

For the third quarter in a row, the restaurants and hotels sector saw negative growth in its contribution to the GDP, reporting a decline of 36.61pc in Q3 after slumping 61.33pc in Q2 and 35.99pc in Q1 last year.

Due to full or partial lockdown, the volume of trade between Bahrain and other Gulf states has decreased to a large extent.

Bahrain’s trade with the largest economy in the region, Saudi Arabia, saw a slight decline of 2.1pc in the first nine months of last year, whereas trade with Kuwait decreased by 15.4pc and with the UAE by 21pc, whereas trade with Oman saw a jump of 4.9pc.

The volume of foreign reserves in Bahrain decreased by 36pc as of end-November 2020 from end-December 2019.

The Bahrain Bourse (BHB) declined by 7.5pc in 2020 and closed at 1489.78 points.

Sectoral performance was mixed in Bahrain with the investment sector (-16.8pc), hotels and tourism (-16.2pc) and commercial banks (-14.8pc) leading the losers for the year.

Services (+25.5pc) and industrials (+22.1pc) were the best performing indices on the exchange.

A survey done by the authorities to assess business confidence found 67pc of investors expected the investment climate to improve or remain stable in the fourth quarter last year.

The strongest business confidence was seen in establishments with foreign investments, large enterprises, non-banking finance companies and businesses with turnover of BD1-3 million.

The coronavirus outbreak has led to a significant increase in unemployment rates around the world, and Bahrain was not immune to the phenomenon, with the rate of unemployment in the country rising to about 9.4pc during the period compared with 4pc in 2019.

However, there was an increase of 5.2pc in Bahraini employment in the private sector during the second quarter of 2020 when compared with the second quarter of 2019.

On the flip side, the number of foreigners working in the tourism, hospitality and restaurant sectors dropped by 21pc in 2020 compared with 2019.

Similarly, the value of real estate transactions saw a slide of 11pc from BD805m as of end-2019 to BD716m as of end-2020.

Data from the Central Bank of Bahrain shows that remittances by expat workers during the first half of last year declined by 13.4pc to BD517m when compared with BD597m in the same period of the previous year.

avinash@gdn.com.bh

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