The Economic Development Board (EDB) issued its Bahrain Economic Quarterly report this week, which estimates that Bahrain’s annual real output continued to grow during 2011, expanding by 2.2%. This exceeded the previous estimate of 1.5% growth as the economy boosted was by a faster than expected recovery in the second half of the year.
The fastest growing sector in 2011 was Transport and Communication at 11% growth for the year, particularly significant as it is a large contributor to the economy, accounting for almost 10% of Gross Domestic Product (GDP). The hotels and restaurants sector was hardest hit in 2011, although it showed significant recovery throughout 2011 following a difficult first half to the year.
According to the report, GDP growth is expected to continue to rebound during 2012 as increases in crude oil production, manufacturing and government spending driving expected economic growth of 4-5%. While a fall in private sector demand and oversupply of commercial properties has slowed construction, government spending is projected to compensate and fuel construction for infrastructure, social housing and other social spending projects such as schools and hospitals.
The budgeted US$10 billion 10-year GCC fund is likely to be dedicated to projects such as these, in addition to already planned spending by the Government. The increase in oil output and high oil prices is also expected to produce large current account surpluses.