Bahrain 

Bahrain country policy

Policy established 14 December 2009

• No Restrictions
• The country ceiling is 1500 mln euro
• Early warning signal 400 mln euro
• - of which was used as at 2010-07-31 0 mln euro

Country class: 3

Bahrain country facts

Atradius Dutch State Business Economic Research
Country Report last updated :  July 7th, 2010

Country :  BAHRAIN

Political Situation
Stable, But Little Political Freedom

Head of state
Sheik Hamad Bin Isa Al-Khalifa (oldest son and crown prince of former Sheik) took over power in 1999.

Form of government
No parliamentary democracy. Sheikh (Sunni minority) rules by decree. Main opposition party, Shia based al-Wefaq Islamic society won 17 out of 40 seats at parliamentary elections (Lower House) of Nov 2006 (earlier elections were boycotted). Upper House appointed by King. Next general elections in Nov. 2010.

Internal Economic Situation
Small Open Economy; Increasing Growth

General situation
Bahrain has a more diversified economy than the other Gulf States: besides oil, also tourism (Saudi’s) and financial services (a greater GDP share than oil) contribute to GDP. Many emerging competitors to become regional financial centre. Increasing real GDP growth in 2010-12 (to > 5%), lead by domestic demand. All components positive contribution. Small budget deficit of 0.7% GDP; modest inflation of 3% (“recovered” USD, no imported inflation, and lower commodity prices). Still a system of public price subsidies. Oil revenues accounts for 70% of public income and export receipts. Interest rates a fixed margin above those in the US. Dinar’s peg to USD will be maintained, in place since 1981. Still strong (partly offshore) banking sector, but exposed to global assets and Dubai properties. Consolidation necessary.

External Economic Situation
Strong Bop In 2010 -2011

Main sources of foreign exchange
Oil exports (80% of total exports), off shore banking centre, tourism, aluminium.

Main foreign markets
Diversified countries.

Main expenses of foreign exchange
Investments for industrial and infrastructural projects, agricultural products

Balance of payments  Remark: the island’s offshore banking units (assets larger than domestic economy) are reclassified as residents.
IMF includes operations of offshore banking units in income balance of the external accounts.