Presentation of the country
Official Name: Kingdom of Bahrain
Government: Constitutional monarchy
Monarch: His Majesty King Hamad Bin Isa Al Khalifa
Area: 760km2 distributed over 33 islands, some of which are uninhabited
Main towns: Muharraq, Riffa, Jidhafs, Hamad Town, Isa Town
Official Language: Arabic
Currency: Bahraini Dinar
National Day: 16 December
Population: 1,569 million inhabitants
Density: 1,851 / km2
Population Growth: 3,8%
Life Expectancy: 77 years
Literacy rate: No World Bank data beyond 2010 (93% (M) 90% (F))
Religions: Islam, Christianity (many congregations for the immigrant population)
Human Development Index (2014): 0.82 (ranked 45th)
(Sources: UNDP 2015)
Nominal GDP: USD 37.74 billion (World Bank 2018)
GDP per capita: $ 23,655 (2017)
Growth rate: 1.8% (World Bank 2018)
Unemployment rate 3.9% (IMF 2018)
Inflation rate: 3.3% (IMF 2018)
Budget balance: -11.7% of GDP (IMF 2018)
Public debt: 93% of GDP (IMF 2018)
Share of the hydrocarbon sector: 18.5% of GDP (IMF 2018)
Main Clients: UAE (19.6%), Saudi Arabia (11.7%), United States (10.8%), China (6.5%)
Main suppliers: China (8.8%), UAE (7.2%), United States (7.1%), Australia (5.3%), Japan (4.8%)
Bilateral economic exchanges (goods only, excluding military equipment) between France and Bahrain amounted to EUR 443.3 million in 2018, down 7.2% compared to 2017.
For more information on French-Bahraini economic relations: https://www.tresor.economie.gouv.fr/Pays/bahrein
BAHRAIN’S ECONOMY IS ONE OF THE MOST DIVERSIFIED IN THE REGION, THE DEVELOPMENT OF ITS INDUSTRY AND FINANCIAL SERVICES BEING AT THE HEART OF ITS ECONOMIC PRIORITIES SINCE THE 1970s.
The national economy differs in several aspects from those of other GCC states: endowed with the lowest population and nominal GDP on the peninsula (respectively 1.5 million inhabitants and 37.8 billion $ in 2018 according to the IMF), it is also the lowest oil producer (200,000 barrels / day, 124.6 M barrels of proven reserves according to the IEA), the most open (opening rate of 147.4% of GDP in 2018 according to the IMF) and the most diversified, the financial sector and manufacturing industry representing respectively 16.5% and 14.8% of GDP in 2018. This apparent diversification masks a strong dependence on oil and gas revenues, which constitute 75 % of budget revenue in 2017 and 46% of goods export revenue in 2016 according to COMTRADE. In the absence of robust public resources (taxation, operating products and financial products), the conduct of a pro-cyclical fiscal policy and the cyclical fall in oil prices structurally lead to the appearance of deteriorated public and external balances.
Hydrocarbons remain the leading sector of the economy with a share of 18.5% of GDP in 2018. Conventional oil production comes from the historic onshore Awali field, exploited since 1932 (45,000 barrels / day) and from the offshore field Abu Safah shared with Saudi Arabia and operated by Saudi Aramco (150,000 barrels / day). On the 1st of April 2018, authorities announced the discovery of a new oil deposit (Khaleej Al Basin). Although the estimated reserves are around 80 billion barrels, several gray areas persist: the recovery rate is very uncertain (between 5% and 50%), the extraction cost is higher than the unconventional American onshore, and the operation remains to be determined. In the downstream oil industry, the Bahrain Petroleum Company (BAPCO) has a refinery in the expansion phase (from 260,000 to 380,000 barrels / day) and modernization (compatible with the new sulfur content standards of the International Maritime Organization). In the gas sector, Bahrain produces 21 billion m3 / year of natural gas from the Khuff reservoir and has an 800,000 m3 / day LNG import terminal, operational in May 2019.
Financial services constitute the second sector of the economy with a share of 16.5% of the GDP in 2018. The creation in 1973 of a single supervisor-regulator (Bahrain Monetary Agency), and the granting from 1975 of an offshore banking license with no condition of national capital ownership threshold, helped attract capital from the sale of petrol and banks fleeing the civil war in Lebanon. The financial center was subsequently expanded, and enriched with a specialization in Islamic assets: creation of a stock exchange (1987) with a capitalization of $ 22 billion in 2018, publication of a rulebook referencing in region (2006), adoption of post-market infrastructure, and establishment of institutions for regulating Islamic finance such as the Accounting and Auditing Organization for Islamic Financial Institutions and the Islamic International Rating Agency. In 2017, 393 financial companies were approved by the Central Bank, including 72 offshore banks representing 68.2% of banking assets, and 22 Islamic banks. The State’s holdings are placed in two sovereign funds, Mumtalakat for non-oil assets since 2006 ($ 15.4 billion in assets in 2017) and Nogaholding for oil and gas assets since 2007 ($ 6.4 billion assets in mid-2017).
The manufacturing sector represented 14.8% of the GDP in 2018. The most important industrial complexes are the Aluminum of Bahrain (Alba) smelter, which is to become the world’s first single-site smelter with a capacity of 1.5M tones / year at the end of the expansion program (opening of line 6, operational at 25% in March 2019), and the petrochemical complex of Gulf Petrochemical Industries Co.
The new priorities for diversification and economic development included in the Kingdom’s Vision 2030 are tourism, infrastructure, manufacturing, renewable energies and ICT. In this regard, Bahrain has set up an innovation ecosystem in fintech comprising a streamlined regulatory framework (Central Bank sandbox), a public incubator (Bahrain Fintech Bay), and a venture capital fund of funds replenished in February 2019 up to $ 55 million of the $ 100 million expected (Al Waha Fund). The Kingdom has also started the process of freeing and allocating frequency bands for the deployment of the 5G standard, for which Huawei has signed a partnership agreement with mobile operator VIVA Bahrain.