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Mon 25 Jul 2011 05:56 PM

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Bahrain rated GCC's 'most open economy'

The island Kingdom will push ahead with economic growth, according to a KPMG report

Bahrain rated GCC's 'most open economy'
Bahrain Financial Harbour

Bahrain has been rated the most open economy in the GCC following its successful efforts to diversify away from oil and gas, in a recent report by accountants KPMG.

The research "Succeeding in a Changing World" which surveyed 1,500 executives across 22 countries in Europe and the MENA region, dubbed the Kingdom the most “financially forward thinking” of the Gulf states, despite being the least hydrocarbons-rich of its neighbours.

“Having long since realised that it cannot rely on oil and gas exports to ensure its continuing prosperity, the Kingdom has strived over the past several decades to diversify its economy away from the extraction of natural resources and towards a more sustainable model of development based on manufacturing and the provision of  services, especially finance,” the report said.

“In doing so, the Kingdom has earned a reputation for being a regional trailblazer and built the GCC’s most open economy.”

It also made clear that Bahrain’s long term economic growth would not be affected by the political unrest, which marred its reputation at the start of the year.

It would, however, need to introduce some reforms and review its economic strategy to ensure a successful economic recovery, the report said.

“While [the unrest] has had a negative impact on short-term growth, the fundamentals upon which the country’s economy is based remain unchanged,” it said.

“Going forward, government and regional investment are expected to have an immediate impact on Bahrain’s economic recovery. Further reforms, however, and a planned revision of the national economic strategy, will be crucial to the Kingdom’s long-term growth and prosperity.”

Earlier this year, a number of important business leaders said there was no doubt Bahrain would retain its status as the Middle East’s financial hub.

Standard and Poor credit analyst Emmanuel Volland said that despite competition from Qatar and Dubai, authorities should be able to convince investors to do business in Bahrain.

In June, the CEO of Arcapita Bank, Atif Abdulmalik, told Arabian Business that the island kingdom’s reputation in the banking sector, strong financial regulator and large, local talent pool, would also be key in retaining investor interest.