By Sarah Townsend
Around 80% of the country's revenue now comes from areas other than hydrocarbons
Bahrain’s real GDP growth hit 4.5 percent in 2014, according to official statistics.
The Bahrain Economic Development Board (EDB) released its latest Bahrain Economic Quarterly report on Sunday, the government announced.
While the hydrocarbons sector expanded by three percent during the year, the report also highlighted that non-oil sectors rose markedly from three percent in 2013 to 4.9 percent in 2014.
For example, the construction sector experienced strong 12.5 percent growth year-on-year, following the initiation of several major infrastructure projects such as road transportation.
And the hotels and restaurants sector also performed well in 2014 with an overall expansion rate of 9.9 percent year-on-year. According to Bahrain’s state news agency the sector benefited from a continued increase in visitor numbers and the opening of several new establishments in 2014.
Meanwhile, the financial services sector saw 3.4 percent year-on-year growth in 2014 – an improvement on the 2.3 percent recorded in 2013. The report noted that the retail banking sector “is in a position to accelerate lending due to high liquidity as loan-to-deposit ratios are less than 50 percent”.
Jarmo Kotilaine, chief economist at the EDB, said: “The report highlights the steadily growing contribution of the non-oil sector to the kingdom’s economy.
“The fact that 80 percent of Bahrain’s GDP now comes from areas other than hydrocarbons highlights the transformative impact of the reform efforts to diversify the economy in past years.
“We expect project spending on infrastructure, tourism, and increased private sector activity to drive non-hydrocarbon growth much further and offset to a large extent the impact of any decline in revenues from oil."
The report predicts real GDP growth will be around four percent over the coming two years, despite the challenging macroeconomic environment. In October the kingdom announced an investment of $22 billion in infrastructure projects in Bahrain over the next four years, including the modernisation of Bahrain International Airport and expansion of Alba’s operation.