I saw in last week’s GDN, a glowing account on Bahrain’s resilient economy, how Bahrain was open for business, a haven for investors.
Lots of conferences and exhibitions, excellent infrastructure, opportunities, potential, aplenty, companies flocking to get to Bahrain.
Welcome news indeed, that the non-oil economy had grown 4.7 per cent in the first half of 2017 and that GDP growth would likely reach 3.4pc in 2017.
Look for the weasel words!
For look at the financial pages, and the view’s not so salutary, from ratings agency, Fitch, which alerted to “credit growth” in the banking outlook, which it saw was in “negative” territory.
Admittedly, “in the GCC region,” without specific mention of Bahrain.
Lots of people however, putting their “spending on the plastic.”
And usually, all customers become, “collateral damage,” in increased credit interest payments.
Fitch reports there had been a “deterioration in various corporate segments, contractors and SMEs, filtering into other segments, including retail.”
All while Bahrain creates more new shopping malls!
Credit concentration was “a key risk in the GCC region, and credit losses are to be expected.”
Fitch agrees that there will be “subdued GDP in the region in 2018, a slight improvement on 2017.”
Government spending, usually the major driver of growth, is “muted” due to the continuing pressure of the low oil price, with oil being 60pc of government revenue in the GCC (and higher than that for Bahrain).
Only a few years ago, the Bahraini budget was predicated on a break even oil price, of $100pbl.
To date, the price has been between $50-$60, although Opec is now looking at curtailing production, to drive up prices.
Unlike 1973, when countries were caught off guard, now more widespread use of fracking, and more forms of alternative energy, so the effect of jacking up the oil price, is likely to be less concerning.
Sovereign-related deposits have been withdrawn from banks for government “liquidity injections,” resulting in a 30pc negative impact, on GCC banks’ ratings.
Undoubtedly, significant debt write-off is coming – not a good look for potential investors.
As with the auctions, for Amwaj Gardens, by the market property leader, Cluttons, the first “starting price” solicited, not a single show of interest, nor did the second, with the suggested price, now dropped by many millions.
Auctions are mooted for three other uncompleted buildings, the lack of interest, is all rather deflating.
The suggestion is now to auction for single apartment lots, but one imagines, that will hardly lead to frantic bidding.
Prospective investors need only look at other uncompleted buildings like Marina West where many were burned, with off the plan apartment purchases paying sizeable deposits.
Good to read of greater focus on the hospitality section as reports from the magazine Arabian Business, except for peak periods, like the Grand Prix, or other signature events, hotel occupancy at many five-star hotels, is less than 50pc, while the cost of their necessary overheads, lack of guests, remains an issue.