08/10/2015 07:53 AST
Bahrain’s non-oil sector is on target to grow by 4.6 per cent this year, according to the latest assessment by the Economic Development Board (EDB).
The EDB’s Bahrain Economic Quarterly report for the three months ended September reveals that the kingdom’s overall growth is expected to reach 3.6pc with output in the oil sector remaining flat.
The semi-private autonomous agency responsible for formulating the country’s future economic development strategy has reported that during the September quarter, the transport and communications sector led the way, with a year-on-year growth of 6.7pc.
The construction sector and the social and personal services sector were also amongst the strong performers, with year-on-year growth of 6.4pc and 6.2pc respectively.
The non-oil sector was supported by strong credit growth, with an increase in lending from an annual rate of 5.7pc in June to 7.7pc in July, the EDB said.
Alongside a strong performance in the non-oil sector, the economy also saw progress in diversification of exports, with high regional demand for non-hydrocarbons products.
The report also highlighted the positive performance of the Bahrain labour market, which logged an unemployment rate of 3.1pc in June, the lowest in several years.
The low rate mirrors the resilience of the non-oil economy and the build-up of large infrastructure projects in the kingdom, which are helping to spur growth in the construction, manufacturing and real estate sectors, it said.
In a statement issued after the release of the report, EDB chief executive Khalid Al Rumaihi said the robust growth in many sectors of the non-oil economy shows that despite the challenging global environment, Bahrain is thriving.
“Concerted efforts to diversify Bahrain’s economy have seen the share of GDP accounted for by oil and gas fall from more than 40pc in 2000 to around a fifth today,” he said.
“This means that our economy is able to continue to grow and create jobs, even when facing considerable headwinds.”
Mr Rumaihi said growth continues to be underpinned by strong fundamentals – the region’s highly supportive demographics, ongoing economic diversification and the increasing integration of the Gulf into global trade and travel flows.
Listing global economic implications for Bahrain, the EDB sees the general policy backdrop remaining permissive, given that the global economic outlook is overshadowed by multiple uncertainties.
Recurrent market uncertainty looks likely in view of structural market concerns.
While this may test financial markets, it is also likely to contribute to a loose monetary policy stance globally.
The stimulus measures being adopted by China are likely to stimulate its demand for important exports and ultimately allay fears of a growth slowdown.
On the oil market, the report says while a rebalancing is underway, several factors can contribute to continued market volatility in the near term.
The regional economy looks likely to remain resilient, which should support activity in the highly regionally integrated Bahraini economy, it adds.
Regional tourist flows have remained strong and investor interest in new real estate and infrastructure projects is likely to continue even if oil price volatility curbs liquidity somewhat.
Gulf Daily News
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