Preliminary data from Bahrain’s Information and eGovernment Authority indicates that the country’s economy grew by 4.9% in 2022, marking the fastest pace of growth in a decade, propelled by a surge in non-oil growth. According to a statement from Bahrain’s Ministry of Finance, the non-oil sector expanded by 6.2%, surpassing the 5% growth target set under the government’s economic recovery plan launched in 2021 in response to the pandemic. Hospitality saw the highest growth rate at 13.9%, followed by government services at 6.7% and real estate and business activities at 5.5%. Other sectors that grew included trade activity at 5.4%, manufacturing at 4.9%, transportation and communications at 4.5%, financial corporations at 4.1%, and construction at 1.4%. The International Monetary Fund (IMF) projected a moderate pace of recovery while acknowledging headwinds from the slowing global economy, geopolitical tensions, and tightening global financial conditions. Although Bahrain’s oil GDP increased by 33.7% in nominal terms, the country still relies on hydrocarbon revenues to balance its books due to its high debt levels.
The IMF estimates that Bahrain requires an oil price of around $122 per barrel, the highest among its neighbours, to balance its budget this year. Despite this, Bahrain’s Ministry of Finance reported that the country’s deficit dropped by 85% in February 2022, and the country reported a mid-year budget surplus of $88m, with revenues surging by 52% compared to the same period last year. In line with its Economic Recovery Plan, Bahrain seeks to launch strategic projects worth over $30bn, attract direct investment of $2.5bn, and implement a series of reforms to bolster public finances and non-oil growth, balance its budget, and stem government debt, including increasing VAT, offering permanent residence to some foreigners, and privatising some government assets. The Bahrain Economic Development Board (EDB), the country’s investment promotion agency, attracted a record $1.1bn in direct investment in 2022, expected to generate over 6,300 jobs in the country over the next three years, with investments from 88 companies in key sectors including financial services, ICT, logistics, manufacturing, and tourism.