Bahrain’s economic growth will rise to 3.2 per cent in 2022 on supportive oil prices and a pick-up in regional economic activity, says S&P Global Ratings.
This will be partially driven by the government’s introduction of an economic recovery plan in October 2021 to spur domestic employment and attract investments in strategic non-oil sectors, including tourism, housing, roads, airports, and electricity.
The multi-year plan targets $30 billion of strategic investments to boost non-oil growth.
Projects include the building of five offshore cities and the Bahrain metro, alongside the expansion of state-owned Bapco’s oil refining capacity.
Separately, projects funded by the $7.5bn GCC Development Fund – introduced by GCC partners in 2011 to support local infrastructure – will continue to support investment over the ratings agency’s forecast period.
Favourable oil prices have improved Bahrain’s fiscal and external positions for now, while the implementation of budgetary consolidation measures such as the doubling of the value-added tax (VAT) rate from January 1, 2022, have helped moderate the government’s accumulation of debt.
The agency expects Bahrain will post current account surpluses over 2022-2023 on still-supportive key metals and oil export prices tied to the ongoing Russia-Ukraine conflict.
Higher-than-expected hydrocarbon and VAT receipts will also support a near balanced budget position in 2022.
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