|07 February, 2018

Bahrain sees robust growth in economy

Bahrain’s near-term economic growth rate is likely to remain above 3% well into 2018 and beyond

Image used for illustrative purpose. Bahrain dinar banknotes and coins

Image used for illustrative purpose. Bahrain dinar banknotes and coins


MANAMA - Bahrain’s near-term economic growth rate is likely to remain above three per cent well into 2018 and beyond with the national accounts data continuing to surprise on the upside, according to the Economic Development Board’s (EDB) latest quarterly report.

The December 2017 Bahrain Economic Quarterly now available on the EDB’s website says that the kingdom’s growth dynamics will continue to be shaped above all by the conflicting forces of infrastructure project implementation and fiscal consolidation.

The semi-autonomous agency formulating Bahrain’s future economic development strategy sees real GDP growth for last year likely to come in at around 3.5pc, in a slight acceleration from the 3.2pc rate recorded in 2016.

With the projected cash-flows of major projects as well as the ongoing multiplier effects from ongoing investments, growth in 2018 has the potential to match – indeed even exceed – the 2017 figure, although fiscal reforms will likely exert some downward pull, the report adds.

With the full implementation of VAT as well as the base effect from a period of rapid project build-up, growth is likely to begin to moderate fairly clearly by 2019. At the same time, new growth drivers will begin to emerge, above all thanks to major manufacturing and logistics investments.

Large-scale infrastructure investments continue to exert a powerful countercyclical effect on economic activity in Bahrain, the EDB asserts.

Both government-related and private investment activities have continued to be steadily scaled up in 2017.

While this positive momentum appears evident across most classes, of projects, it is particularly evident from the activities of the GCC Development Fund.

During 2017 as a whole, the cumulative amount of money disbursed almost doubled from $751 million in the fourth quarter of 2016 to $1.4 billion a year later. A significantly larger increment is expected this year, says the report.

As 2019 begins, Alba Line 6 will begin operations, which will increase the smelter’s production capacity by 540,000mt to 1.6m tonnes a year.

A number of individual investments are making good headway: The Airport Modernisation Programme is on track for completion in the second quarter of 2019. The $1.1bn investment will expand the capacity of the airport to 14m passengers a year.

Tender documents are due to be issued soon for the Al Dur 2 independent water power project which will have a power generation capacity of up to 1,500 MW and a water desalination capacity of 50m gallons a day.

The power capacity is expected to become available by mid-2020 followed by water a year later.

The main $4.2bn contract for the Bapco Modernisation Programme was awarded in early December last year. The capacity of the refinery will increase from 267,000 to 360,000 bpd.

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