Bahrain GDP ‘to grow five per cent this year’

MANAMA: Bahrain’s gross domestic product (GDP) is expected to grow more than five per cent this year, the Bahrain Economic Development Board chief economist has affirmed.

Talking to the GDN on the sidelines of the WIFFMC 2013 yesterday, Dr Jarmo Kotilaine said the oil sector normalisation is likely to be the key growth driver this year.

“Growth rebounded clearly last year, led by a strong non-oil sector. It was held back by technical disruptions in the oil sector.

“Output from the Abu Safa oilfield, which Bahrain shares with Saudi Arabia, was below normal for most of last year because of technical problems, hurting growth.

“But the problems were fixed in November and this will boost economic growth this year, along with higher output from an onshore Bahraini oilfield, he said.

According to him, bank lending in the kingdom too has been increasing at a comfortable pace and bankss remain highly liquid.

The activity in the Gulf economies is holding up well, buoyed by fiscal stimulus, he said.

The Gulf economies are expected to outperform the rest of the region, he added.

Dr Kotilaine sees regional government spending staying strong through the year.

“Growth is becoming less reliant on the oil sector and potentially government spending as well.

On the larger Middle East and North Africa (Mena) region, citing data, he said Mena countries grew at 4.8pc from 2001 to 2012, compared with only 2.4pc in Organisation for Economic Co-operation and Development economies.

“By removing trade barriers and refocusing on the regional market, there is a large potential to boost trade and create investment opportunities,” he added.

“The Mena region, with a population of around 400 million, has a high population growth of 2pc compared with global growth rate of 1.1pc.

“Today, with half of its population under age 25, Mena has the second youngest population among world regions, after sub-Saharan Africa.

“The urban population is rising rapidly and by 2050 more than 75pc of the population will be living in an urban setting compared with 35pc in 1960,” he said citing World Bank projections.

“The high rate of urbanisation will drive a high demand for provision of adequate infrastructure, health, education and other services such as finance and telecommunications and others,” he said.

In his global economic outlook, Dr Kotilaine said he saw moderate expansion with persistent divergence between mature and emerging economies.

“Global oil demand and supply will continue to grow with a generally tight balance,” he added.

By AVINASH SAXENA, May 28, 2013