Bahrain beats out UK, Japan on economic freedom

Gulf state ranks 10 on global index, outstripping UAE, Saudi Arabia, Qatar and Kuwait
Bahrain beats out UK, Japan on economic freedom
Bahrain was the highest placed of 17 countries in the MENA region, the Index said
By Gavin Davids
Thu 13 Jan 2011 12:33 PM

Bahrain has
been ranked one of the top countries in the world to do business, placing above
the UK, Japan and the powerhouses of Germany and France, a new report has said.

The Gulf state
outstripped neighbouring Qatar, Saudi Arabia, Kuwait and the UAE to place 10 of 183 countries in the 2011 Index of Economic Freedom, on spot below the
United States.

Top of the
list was Hong Kong, followed by Singapore and Australia.

Bahrain was
the highest ranking country among 17 from the MENA region, according to the
list that measures commitment to free enterprise.

Bahrain’s efforts
to smooth the path for foreign investment and its bid for economic
diversification were key factors in its jump up the rankings, said notes accompanying
the index.

“Commitment
to structural reforms and openness to global commerce have enabled Bahrain to
become a financial hub and the regional leader in economic freedom,” analysts
said.

“As one of
the region’s least dependent oil economies, it benefits from a competitive tax
regime and a sophisticated financial sector that facilitates free flow of
capital.”

But the
index warned of the looming threat of high unemployment – an estimated 15
percent of Bahrain’s one million citizens are unemployed, it said.

Despite
that, the island is expected to see 5.9 percent compound annual growth over the
next five years and a GDP of around $28.1bn.

Rival Gulf
states, in contrast, did not fare as well. Qatar was the second highest-placed at
No.27, while Oman and UAE – at 34 and 47 - were the only other GCC states to
rank in the top 50.

Qatar’s
ranking was undermined by the emirate’s dependency on energy and its restrictions
on foreign investment, the index said.

Although it
attempts have been made to diversify, oil and gas continue to account for about
85 percent of export revenues and about 50 percent of GDP.

Oman shone
for its high rate of state spending and efforts to lure FDI, seeing it rise 2.1
points from its 2010 rank, the index said.

The UAE,
which narrowly made the top 50, won praise for its efforts to tackle
corruption. However its rating was hit hard by the collapse of its real estate
market in the wake of the economic crisis, the index said.

Going
forward, the UAE must boost transparency of public finances, centralised debt
management and ensure an independent legal framework, the index noted.

Saudi
Arabia and Kuwait ranked the worst in the GCC, coming in at No.54 and No.61
respectively, hampered by their dependency on the oil industry.

The index measures 10 categories of economic freedom,
including openness to trade and investment, business and labour regulation,
property rights, corruption, monetary stability and financial competition.

 

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