Bahrain economy grows 2% despite GCC trade slump

• Both oil and non-oil trade rise
• Transport and hotels lead growth
• Saudi remains top export partner

Bahrain’s economy grew by 2 percent year on year in the second quarter of 2023, despite a drop in trade with neighbouring GCC countries.

The kingdom saw its non-oil sector increase by 2 percent, while the oil sector was up 2.2 percent.

Bahrain’s fiscal and current account break-even oil prices are among the highest in the region, estimated at about $113 and $75 per barrel of crude oil in 2022, according to research from Allianz Trade.

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Latest government statistics reveal the transport and communication sector increased 13.3 percent year on year in Q2, followed by hotels and restaurants (9.6 percent) and real estate and business activities (4.9 percent).

The financial corporations sector retained its position as the highest contributor to real GDP at 17.3 percent, followed by the crude petroleum and natural gas sector at 17.10 percent and government services (14.10 percent).

Trade between Bahrain and the rest of the GCC dropped by 5 percent year on year in the second quarter, from $2.1 billion to $2 billion.

Saudi Arabia retained its position as Bahrain’s top export partner, while China remained as Bahrain’s top import partner.

Bahrain’s GDP growth will decelerate to 2.2 percent this year, likely to be caused by a slowdown in global activity, lower oil prices and the easing in tax receipts, according to the Economic Insight report for the Middle East, commissioned by ICAEW and compiled by Oxford Economics. 

This follows the fast-paced growth of 2022, when Bahrain’s economy expanded by 4.9 percent, the fastest rate in nine years.