Manama, Bahrain's headline real growth rate increased sharply in the second quarter of 2018 to an annual pace of 2.4 per cent. The data published in the Bahrain Economic Quarterly Report (BEQ) shows a significant increase in growth from the previous quarter which was underpinned by both the normalisation of oil production and markedly faster non-oil growth.
The quarterly report produced by the Bahrain EDB, found that Bahrain's non-oil GDP expanded by 2.8 per cent in the second quarter, driven by the construction (up 6.7 per cent) and manufacturing sectors (up 4.5 per cent). The ongoing expansion in the construction sector is illustrated by the total sum of infrastructure projects in Bahrain reaching $ 87.3bn in mid-September according to MEED Projects, a 3.8 per cent year-on-year growth. A number of strategic projects are making headway. For instance, the cumulative total of active infrastructure investments funded by the GCC Development Fund attained USD 3.7bn in the third quarter, which is an increase of 12.7 per cent on 2017. With the recent build-up in tendered projects, this figure is set to grow further at an accelerating pace in the near-term.
The total value of foreign direct investment is continuing to increase at a brisk pace. The total value of projects facilitated by the EDB in the first nine months of 2018 was 138 per cent higher than a year earlier. Of the companies attracted by the EDB in the first three quarters of 2018, 31 out of the 76 companies fall in the manufacturing sector, highlighting the sector's strength and the Kingdom's ideal geographic position as a gateway to the Gulf.
Bahrain's impressive improvement in the second quarter was thanks to a broad-based recovery across the whole economy. In particular, the expansion of Bahrain's non-oil GDP stands out in the regional context. With the oil industry now accounting for less than 20% of the economy, Bahrain growth was largely led by the non-oil economy, as opposed to most of the Gulf region where the stronger growth has been led by higher oil prices and production, Dr. Jarmo Kotilaine, EDB's Chief Economic Advisor, commented.
Increased economic growth across the GCC will benefit all countries, but the BEQ concluded that Bahrain will be a particular beneficiary as renewed spending power drives growth in visitors and business activity. For example, the Bahraini tourism industry continues to grow across a broad range of metrics. Visitor numbers are up 5.8% year-on-year and the average number of nights spent in Bahrain per visitor jumped by 16 per cent. This reflects Bahrain's reputation for combining a cosmopolitan city with richly preserved heritage.
On the other hand, the BEQ struck a note of caution that although GCC growth is expected to accelerate to 2.5 per cent this year and 3% in 2019, this is still below historical levels. Business confidence also remains unpredictable, and the growth of the non-oil sector has proved lacklustre. This has prompted a number of Governments to initiate economic stimulus programmes after a period of fiscal retrenchment.
Source: Bahrain News Agency