Bahrain skyline at golden hour

Bahrain Economic Forecast

Bahrain Economic Outlook

Following 2022’s strong performance, annual GDP growth should have moderated so far this year. Challenges to the performance of the oil sector mounted: Year-on-year crude production plunged over 14% in the first two months of the year. Meanwhile, private spending was likely a key driver of growth at the outset of 2023; price pressures in Q1 softened to their lowest level since Q4 2021, providing some support to consumers’ budgets. In the fiscal arena, authorities presented the 2023–2024 state budget in early April; the plan aims to drastically cut the public deficit to nearly BHD 570 million (around USD 1.5 billion), a fourth of 2021–2022’s figure. Total revenue in the period is expected to be BHD 6.6 billion. In other news, Bahrain and Qatar restored diplomatic ties in April following a years-long dispute; this bodes well for trade and tourism.

Bahrain Inflation

Consumer prices declined 0.1% year on year in March (February: +1.1%), largely due to a statistical effect: In January 2022, the VAT was doubled to 10%, fueling inflation. Meanwhile, on 3 May, the Central Bank hiked the one-week deposit rate by 25 basis points—mirroring the Fed—to 6.00%. In 2023, inflation will be lower than last year, thanks to a fading base effect and higher interest rates.

This chart displays Economic Growth (GDP, annual variation in %) for Bahrain from 2012 to 2021.

Bahrain Economic Data

2017 2018 2019 2020 2021
Population (million) 1.5 1.5 1.5 1.5 1.5
GDP (USD bn) 35.3 37.7 38.6 34.6 38.8
GDP per capita (USD) 23,529 25,068 25,977 23,521 25,774
GDP (BHD bn) 13.3 14.2 14.5 13.1 14.6
Economic Growth (Nominal GDP, ann. var. %) 9.8 6.7 2.3 -10.2 11.9
Economic Growth (GDP, ann. var. %) 3.8 2.3 2.2 -4.9 2.2
Private Consumption (ann. var. %) 1.3 1.4 0.5 -4.4 18.9
Government Consumption (ann. var. %) 11.0 1.8 -1.5 -2.5 6.5
Fixed Investment (ann. var. %) 10.6 9.4 -2.8 -3.8 -4.2
Exports (G&S, ann. var. %) 3.7 3.3 0.4 -2.5 29.5
Imports (G&S, ann. var. %) 7.6 5.7 -5.6 -0.7 15.2
Fiscal Balance (% of GDP) -14.0 -11.8 -9.0 -16.3 -11.6
Public Debt (% of GDP) 88.1 94.6 101.6 128.5 126.3
Money (ann. var. of M2 %) 4.2 2.4 11.1 6.5 4.9
Inflation (CPI, ann. var. %, aop) 1.4 2.1 1.0 -2.3 -0.6
1-Week Deposit Rate (%, eop) 1.75 2.75 2.25 1.00 1.00
Exchange Rate (BHD per USD, eop) 0.38 0.38 0.38 0.38 0.38
Current Account Balance (USD bn) -1.4 -2.4 -0.8 -3.2 2.6
Current Account Balance (% of GDP) -4.1 -6.4 -2.1 -9.3 6.7
Merchandise Trade Balance (USD bn) -0.5 -1.1 0.9 -0.1 4.9
Merchandise Exports (USD bn) 15.5 18.0 18.1 14.0 22.3
Merchandise Imports (USD bn) 16.0 19.0 17.2 14.2 17.4
Merchandise Exports (ann. var. %) 21.4 16.2 0.5 -22.4 59.1
Merchandise Imports (ann. var. %) 18.3 18.8 -9.6 -17.8 23.1
Foreign Direct Investment (USD bn) 1.4 1.7 1.5 1.0 1.8
International Reserves (USD bn) 2.3 1.9 3.4 1.9 3.9
International Reserves (months of imports) 1.8 1.2 2.4 1.7 2.7

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