Bahrain Continues to Adopt Initiatives of Income Diversification

The Kingdom of Bahrain continues to adopt more initiatives of income diversification in order to move further away from the consequences of the sharp drop in oil prices, enhancing the strength of the national economy and its ability to absorb financial shocks resulting from regional and global oil market volatilities.
The impact of economic diversification programs in Bahrain is clear in the growth of non-oil sectors and their increasing contribution to the national economy, as the contribution of the financial services, manufacturing and construction sectors has exceeded the contribution of the oil sector to the gross domestic product (GDP) over the last few years, which does not exceed 20%.
According to the latest statistics of the Bahrain Economic Development Board (EDB), the country's economic growth accelerated in the third quarter of 2016, with a growth rate of 3.9% compared to Q2 of 2.7%. Bahrain's economy reached an annual rate 3.6% year-on-year, up from 2.95% in 2015.
The non-oil sector of Bahrain's economy reached an annual rate of 4.7% in the third quarter of 2016. This marked a clear acceleration from the 3.6% pace seen during Q2. The increase on an annual basis during the first three quarters combined reached 3.7%.
The construction sector led growth in the third quarter, which expanded at an annual rate of 7.2%, as projects started to support growth in many other sectors besides non-oil sectors.
The sharp rise in the growth rate of the construction sector shows the pivotal role of infrastructure investments as a growth engine opposite to the economic cycle in Bahrain. The GCC Development Fund is an important element in these projects which have seen rapid implementation in 2015 and 2016. 
In the coming years, Bahrain will implement promising strategic projects with a total value of more than $32 billion in non-oil sectors and infrastructure development. 
The Economic Development Board's policy focuses on four economic sectors in its main plan to maintain economic gains and create strong economic momentum in the short and medium term, including manufacturing, transportation, logistic services, tourism development, financial services sector and ICT sectors. 
Regarding the oil sector, Bahrain's oil production reached 200,000 pbd during 2016, as Abu Safaa field's production has slightly increased than its standard capacity with an annual average production of 15,925 barrels, while Bahrain's field production reached 48,753 barrels bpd. 
There are also many future projects on the real estate sector, which has shown considerable flexibility under difficult market conditions in the region. Although rent of offices and retail spaces have stagnated, it exceeded expectations in the residential sector.  According to the Bahrain's Land Survey and Registration Bureau, the total real estate volume reached BHD1.21 billion during 2016. 
In the tourism sector, Bahrain witnessed a growth in the number of visitors in 2016. According to Nationality, Passports and Residence Affairs, the total number of visitors through King Fahd Causeway increased to 12.2 million visitors, while the number of visitors through Bahrain International Airport reached 2.7 million. 
For the industrial sector, changes are taking place with several important expansion projects that raise production capacity and use advanced technology, led by the progress made by the the sixth potline for Alba aluminium smelter in the Kingdom.  
In line with its efforts to attract more foreign direct investments, the Government of Bahrain continues to promote itself as a leading investment climate for all, depending on many features, such as the freehold properties for foreigners and the facilities provided for commercial records of various activities and events, in addition to the Kingdom's location in the heart of the Arabian Gulf, with quick and easy access to all Middle East markets, especially with Saudi Arabia via King Fahd Causeway. 
Bahrain's investment environment is committed to maintaining the region's most liberal business environment, with zero taxation for private companies, few indirect taxes for private enterprises and individuals, and free repatriation of capital. 
Bahrain also has a fully liberalised telecommunications sector with no regulatory restrictions.  It also has a track record as a modern international business economy stretching back several decades. Its financial services sector has been thriving for 40 years with more than 400 financial institutions. 
Low costs are another important advantage in the Bahraini economy, as basic costs such as rents for offices and industrial lands are lower than elsewhere in the region. The privatisation in the utilities sectors mean that electricity, gas and water costs are highly competitive. And with low living costs, wages are also highly competitive. 
Workforce in Bahrain is the most educated and skilled in the Gulf. This means investors can minimise spending on expatriate packages and build a long-term, sustainable local workforce. 

Source: QNA