The slump in oil prices presents a challenge to Bahrain's growth outlook, with the government under pressure to cut spending over the coming years. That said, we expect development funds from the Gulf Cooperation Council (GCC) to support construction activity, while strong consumption in Saudi Arabia will feed into Bahrain's tourism sector. We forecast real economic growth to slow to 2.9% this year and in 2016, compared to an annualised 4.0% between 2010 and 2014.
Bahrain's reputation as a stable and welcoming location to do business in the Gulf has suffered as a result of the volatile political climate. At the moment, it remains to be seen if Manama will be able to compete with Doha and Dubai in attracting investment into the all-important hospitality and financial services industry.
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The economy's medium-term outlook remains contingent upon a lasting solution being found to the current political crisis. Unfortunately, we maintain our relatively guarded outlook on the prospects that the government and opposition can come to some form of agreement in the near term.
Bahrain's weak medium-term fiscal prospects will force the government to make difficult choices. We believe that Manama will have little option but to introduce new taxes over the coming years, while the issue of spending consolidation will loom large on the agenda. Support from Saudi Arabia could delay these pressures, but would entail a significant loss of sovereignty.
Consumer price inflation (CPI) in Bahrain will remain stable and primarily driven by the country's tight housing market over the course of 2015. We expect interest rates to stay unchanged until the second half of 2015, when the Central Bank will be forced to impose a 50 basis points hike to keep up with the US Federal Reserve.
Key Risks To Outlook
A more pronounced regional crisis stemming from an uptick in tensions between Iran and the West could see risk premiums spike higher, particularly for Bahrain.
The Bahrain Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Bahrain. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.
An influential new analysis of Bahrain's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.
Key Uses
* Forecast the pace and stability of Bahrain's economic and industry growth through end-2019.
* Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
* Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
* Contextualise
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Just Published: "Bahrain Country Risk Report Q4 2015"
Company: Fast Market Research, Inc.
Contact Name: Bill Thompson
Contact Email: press@fastmr.com
Contact Phone: 1-413-485-7001
Contact Name: Bill Thompson
Contact Email: press@fastmr.com
Contact Phone: 1-413-485-7001