Bahrain saw 4.5 per cent real GDP growth in 2014, according to Bahrain Economic Development Board (BEDB), with 4.9 per cent growth in the non-oil sector.
The hydrocarbon sector also increased more than expected, up three per cent, despite last year’s drop in oil prices.
BEDB said there was strong performance in the construction sector, up 12.5 per cent, following the initiation of a number of major infrastructure projects.
The hospitality and restaurant sector was also up 9.9 per cent year-on-year, due to a continued increase in visitor numbers and a significant jump in hotel capacity, the organisation said.
Growth in the financial services sector stood at 3.4 per cent year-on-year in 2014, up from 2.3 per cent in 2013. BEDB said the retail-banking sector was in a position to accelerate high liquidity as loan-to-deposit ratios were less than 50 per cent.
The organisation forecast real GDP growth of around 4.0 per cent for the next two years, “despite the challenging macroeconomic environment”.
“The fact that 80 per cent of Bahrain’s GDP, now comes from areas other than hydrocarbons highlights the transformative impact of the reform efforts to diversify the economy in past years,” said Dr. Jarmo Kotilaine, chief economist at the EDB said:
“We expect project spending on infrastructure, tourism, and increased private sector activity to drive non-hydrocarbon growth much further and offset to a large extent the impact of any decline in revenues from oil.”
The contribution from the non-oil sector is also expected to increase through $22 billion of infrastructure projects over the next four years, including the Bahrain International Airport modernisation project and expansion of aluminium company Alba’s operations, as well as other sectors including housing and education, BEDB said.