Most sectors of Bahrain’s economy are showing moderate rates of growth as the country seeks to recover from more than a year of unrest, Standard & Poor’s said in a new report.
The rating agency cautioned that the potential for unrest in the Gulf kingdom “remains acute” as authorities struggle to defuse tensions.
In affirming its long-term foreign and local currency sovereign credit ratings at ‘BBB’ with a negative outlook, S&P said current economic growth was below lower than historical levels.
“The outflow from Bahrain’s international financial sector also appears to be stabilising, at least for banks,” S&P said in a new report, adding that it expected growth to rise to 3.2 percent in 2012.
“We believe challenges to government legitimacy will persist and the potential for unrest remains acute,” S&P added.
“In our view, this could continue to undermine Bahrain’s international image as a business-friendly location.”
The report added that the unrest has weakened Bahrain’s fiscal position, with the budget-balancing oil price rising to $120 per barrel.
Oil- and gas-related revenues account for 88 percent of total revenues, making the budget “precariously sensitive to declines in price or volume”, it said.
S&P said it estimates that general government debt will rise to 42 percent of GDP in 2012, from 24 percent in 2009, reducing the government’s net asset position to 6.9 percent of GDP in 2012 from 25 percent in 2009.
“The negative outlook reflects our opinion that we could lower the ratings if political turmoil further weakens economic prospects and threatens external and fiscal performance. We could also lower the ratings if oil prices remain below $100 per barrel for a sustained period,” S&P said.
Follow us on
