By Claire Ferris-Lay
Eruption of political turmoil said to have caused $2bn loss to Gulf state’s economy last year
Bahrain’s economy grew by two percent in 2011, the kingdom’s Economic Development Boardsaid, with the agency attracting nearly $300m in foreign investment despite the nation's social upheaval.
The Gulf state is forecast to see four percent economic growth in 2012, the EDB said, adding that 13 financial services firms had received licenses from the Central Bank last year.
The agency declined to specify the value of foreign investment in the year-earlier period.
The report comes days before the first anniversary of failed anti-government protests in Bahrain, which left at least 30 people dead and dozens more injured.
Bahrain imposed martial law and called in troops from its Gulf neighbours in a bid to quell weeks of unrest and restore order.
The turmoil led to a decline in tourism, real estate and retail which contributed to an estimated $2bn loss to the economy, according to Bahrain’s Chamber of Commerce and Industry.
A number of foreign firms chose to relocate staff, with French lenders BNP Paribas and Credit Agricole in August moving staff out of Bahrain to other Gulf offices.
The US Embassy in Bahrain said earlier this month it would relocate staff out of protest areas, which have been disrupted by road closures and disrupted traffic.
The prospect of continued unrest in the Gulf state is expected to have a negative effect on the country’s economic prospects but data published by authorities “are more encouraging than we had expected”, Citibank said in January report.
“Economic growth, which had slowed to just 1.1 percent year-on-year in Q2 2011, picked up to 2.4 percent in Q3, suggesting a shallower and less prolonged impact from the unrest than we had previously anticipated,” analysts said. “As a result, we have raised our economic growth estimate for 2011 to 2.6 percent, from 0.9 percent in our previous monthly,” it added.
Growth is still below trend however, said Citibank, and will remain so in the medium-term.
“The reality is what has happened in Bahrain and what continues to occur in Bahrain is having a negative impact on the investment environment in Bahrain,” said Farouk Soussa, chief economist for the Middle East at Citi, in September. “There is very little doubt that perceptions of doing business in Bahrain have deteriorated over the past six months.”