Manama: The growth momentum in Bahrain’s economy continues to exceed expectations, with the annual pace of growth in the non-oil sector reaching 4.8 per cent in the first nine months of 2017.
Full-year non-oil growth for 2017 is seen exceeding the 4 per cent mark recorded in 2017, according to the latest Bahrain Economic Quarterly published by the Bahrain Economic Development Board (EDB).
The performance of the non-oil private sector also meant that overall economic growth in the kingdom reached an annual pace of 3.6 per cent for the first three quarters of the year — improving on the 3.2 per cent recorded in 2016 as a whole and making Bahrain the fastest-growing economy in the Gulf Cooperation Council (GCC).
“Bahrain’s economy continues to deliver at the upper end of growth expectations thanks to a combination of robust structural and countercyclical drivers,” Dr Jarmo Kotilaine, chief economic adviser of the EDB, said. “We expect this positive dynamic to continue into 2018 as the regional environment becomes more supportive of growth and as the diversified economy continues to expand, supported by an unprecedented investment pipeline.”
There are also increasing efforts to position the country to take advantage of emerging growth drivers as the region’s economy undergoes a paradigm shift, he added.
“As growth becomes increasingly underpinned by improvements in productivity, Bahrain’s investment in infrastructure, regulatory reform and development of human capital will play a vital role in ensuring long-term, sustainable prosperity and expansion.”
Non-oil growth in Bahrain is almost entirely driven by the private sector at a time of fiscal austerity. The positive momentum is broad-based, characterised by strong performances across a number of areas. Hotels and restaurants, social and personal services, transportation and communications, and financial services all achieved in excess of 6 per cent year-on-year real growth during the first three quarters of 2017.
All of this points to the continued strong progress of economic diversification in an economy where the non-oil sector collectively already generates more than 80 per cent of GDP.
While growth is benefiting from a range of structural drivers, non-oil growth is particularly boosted by large-scale infrastructure investments at a time of historically subdued oil prices and low government spending growth, the EDB said.
The overall investment project pipeline is estimated to have increased by nearly 20 per cent last year and is led by $32 billion (Dh117.53 billion) worth of strategically important priority projects that are progressing according to plan.
These range from the airport modernisation project to the expansion of the Alba aluminium smelter and the Bapco (refinery) modernisation project. In many areas, project implementation has been accelerating and this is set to continue in 2018.
During 2017, the value of tendered projects as part of the GCC Development Fund rose from $3.9 billion to more than $4.1 billion. The cumulative amount of money disbursed almost doubled from $751 million in the fourth quarter of 2016 to $1.4 billion a year later.
Alongside a strong performance in the first nine months of 2017, Bahrain has also put in place a number of initiatives designed to position the kingdom to benefit from future growth opportunities in emerging sectors.
In 2017, Bahrain implemented key pillars of the fintech regulatory framework, including the launch of a regulatory sandbox which has already accepted its first six entrants. Bahrain is also set to launch the first dedicated fintech hub and corporate incubator in the Middle East and Africa region in February.
Bahrain FinTech Bay will collaborate closely with the Central Bank of Bahrain, notably its new, dedicated Fintech and Innovation Unit, and the Bahrain EDB.
The kingdom is also making substantial investments in its ICT infrastructure and ecosystem in a bid to make digitisation and creative tech-based entrepreneurship key drivers of economic activity. The second half of 2017 saw a number of events designed to drive the agenda forward. These included the Amazon Web Services (AWS) Summit, the Technology Week Tent, and the MIT Innovation Conference.