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Tue 17 Mar 2009 05:19 PM

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Global Investment sees lower '09 growth for Bahrain

Kuwait-based GIH sees Bahrain's growth rate at 2.5-3% on lower oil prices, global woes.

Global Investment House said it expects Bahrain's economic growth rate to slow to 2.5-3% in 2009, mainly due to lower oil prices and the global slowdown.

"The global financial crisis has brought an end to a prolonged oil boom in the Gulf, including Bahrain, and has reversed years of strong economic performance and massive fiscal surpluses," Global said in a note to clients.

In 2007, Bahrain's economy surged 16.4 percent to $18.45bn, while real gross domestic product (GDP) grew by 8.1 percent to $11.81bn, the investment bank said.

Though Bahrain is the least oil-dependent nation among its regional peers, oil and gas contributed almost a quarter to the total GDP of the country in 2007, the investment bank said.

Oil prices have collapsed since July last year, losing two-thirds of their value from a peak of almost $150 a barrel and dragging fuel costs to their lowest levels in several years.

"We believe the sharp fall in oil prices will significantly constrain the government's ability to increase spending," Global said. (Reuters)