Economic report says high oil prices continued to help economy recover from unrest
Bahrain's economic growth sped up to 2.2 percent quarter-on-quarter in the July-September period, the government said, as high oil prices continued to help the economy recover from political unrest and capital flight earlier this year.
Gross domestic product growth accelerated from 1.3 percent in the second quarter of this year, the statistics agency said on Thursday.
On a year-on-year basis, GDP expanded 2.4 percent in the third quarter after 1.1 percent growth in the second.
The small island state, a Gulf financial hub, was hit hard in February and March by its worst unrest since the 1990s, which forced banks and shops to close and triggered an outflow of funds. GDP shrank a revised 1.3 percent in the first quarter of 2011, the first contraction since the global credit crisis in 2008.
Gabriel Sterne, a senior economist at the Exotix investment bank in London, said oil was so important to Bahrain that it was supporting an economic recovery. "As long as oil holds up, I think that the economy could survive," he said.
But he added that there was still concern about whether Bahrain could fully regain its attractiveness as an investment destination in other sectors in the wake of the unrest.
"We still do see problems existing in terms of the non-oil economy, in the financial sector where there is a concern that a lot of international institutions would shift to Dubai in tourism and business," he said.
Output of the hydrocarbon sector climbed 3.5 percent in inflation-adjusted terms in the third quarter compared with the same period a year ago. But the real estate sector was down 5.6 percent and hotels fell 8.7 percent in the quarter.
Bahrain is now trying to heal sectarian divisions between the island kingdom's Sunni rulers and majority Shi'ites to prevent any further unrest. A government-commissioned report, designed to help this process, was released on Wednesday and acknowledged that security forces used excessive force to suppress pro-democracy protests.
King Hamad bin Isa al-Khalifa, speaking after the report was published, said laws would be reviewed and if necessary revised in light of the unrest.
On Wednesday, the country's finance minister estimated that GDP would grow between 1.6 and 1.7 percent this year, accelerating to 4.5 percent in 2012.
Analysts polled by Reuters in September were not as optimistic about next year's growth; they forecast 2.0 percent in 2011 and 3.2 percent in 2012.