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Middle East and North Africa
Bahrain |
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Last reviewed: 17 November 2008 |
Country information
ECONOMY
Basic Economic Facts
GDP per head: US$25,300
Inflation: 3.5%
Major Industries: Aluminium, oil and gas, metal and ship building and repair, financial services and tourism.
Major trading partners: Saudi Arabia, US, India, Japan, UK, France, South Korea.
Exchange rate: UK£1 = BD 0.744 (BD is tied to the US$)
Bahrain has a small, reasonably prosperous economy with less dependence on oil than most other Gulf states. Having been the first to discover oil in 1932, the economy is now well diversified and one of the acknowledged banking, financial services, and human resources development and training centres of the Gulf. The economic environment is liberal, but well regulated; the authorities have managed recent oil price fluctuations sensibly and successfully trained Bahraini nationals for private sector employment. “Bahrainisation”, a policy employed by industry and government in the last twenty years, is in effect in abeyance and may be replaced shortly by a new, less stringent system of incentives to employ Bahrainis, created by the Economic Development Board.
In Bahrain, petroleum production and processing account for about 60% of export receipts, 60% of government revenues, and 30% of GDP. With its highly developed communication and transport facilities, Bahrain is home to numerous multinational firms with business in the Gulf region. Financial and insurance services contributed 30% of GDP in 2006.
Long-term prospects for the small Bahraini market are linked to wider Gulf markets, particularly Saudi Arabia. Bahrain already has a large offshore financial sector serving Saudi and Gulf needs, although Saudi restrictions prevent Bahrain from becoming a more successful base for Saudi investments. Recent Saudi moves towards economic liberalisation and WTO accession could make it easier for Bahrain-based firms to do business in Saudi Arabia. Linked to this, Central Bank of Bahrain is leading the way to establish Bahrain as the premier Islamic banking centre in the Middle East, with 16 Islamic banks and financial institutions already based in the kingdom. The continuing development of the Bahrain Financial Harbour is a key element of the government’s strategy.
In 2004 Bahrain signed a Free Trade Agreement with the US.
