By Staff writer
Bahrain Economic Development Board chief says non-oil sector set to grow by more than 3% this year, 2.4% next year
Bahrain's non-oil economy is expected to record more than 3 percent growth for 2016 and 2.4 percent in 2017 as the country continues its diversification efforts away from a reliance on oil revenues, according to a senior official.
Khalid Al Rumaihi, chief executive at Bahrain Economic Development Board, said the ongoing acceleration of more than $32 billion of planned infrastructure projects is likely to continue to act as a counter-cyclical growth driver in the near-term.
He said in many cases – such as the modernisation and expansion projects at Alba, Bahrain International Airport and BAPCO – they will also "underpin longer term productivity growth in the future".
His comments follow a report last week that said Bahrain is the GCC country economically most at risk from the US Federal Reserve’s decision to hike interest rates earlier this month.
The Fed’s 25 basis points hike in interest rates will add to liquidity pressures already experienced by the Bahraini economy, while doing little to mitigate inflationary pressures as these mostly reflect subsidy cuts, according to a report by BMI Research.
Speaking to Arabian Business about Bahrain's prospects for 2017, Al Rumaihi said that at a regional level, it seems likely that the oil price and the way the region’s economies are working to adapt to it will continue to be a dominant theme.
"I won’t begin to attempt to predict oil prices but I do think we will continue to see important changes taking place across the region as countries make the changes necessary to move away from an economic reliance on hydrocarbons," he said.
"We have already seen some examples of this as countries around the region reduce subsidies and begin to diversify sources of government revenue while also rationalising expenditure," he added.
He said that at a macro level, it is likely to mean a long-term shift from extensive growth driven by increases in capital, land and people to productivity-driven growth.
"Overall, while we recognise the challenges that the current environment poses, we look forward to 2017 with optimism. The GCC is at an exciting point in its development as we begin to see the economic transformations taking shape and we look forward to the opportunities it will present," he noted.