BAHRAIN’S economic future is looking bright, the International Monetary Fund (IMF) has said following the conclusion of its 2025 Article IV consultation mission to the kingdom.
The mission, led by John Bluedorn, was in Manama from November 9 to 20, and praised the resilience and anticipated growth trajectory of the Bahraini economy.
The IMF highlighted that despite a challenging global and regional environment characterised by tight financial conditions, Bahrain’s real GDP grew by a solid 2.6 per cent in 2024. More importantly, the future outlook is significantly positive: Growth is projected to accelerate to 2.9pc in 2025 and further to 3.3pc in 2026. This anticipated surge is attributed to major capital projects like the completion of the refinery upgrades and a robust performance across the non-hydrocarbon sector, particularly in tourism and the financial sector.
Mr Bluedorn said: “Growth is anticipated to rise to 2.9pc in 2025 and to 3.3pc in 2026, with the completion of refinery upgrades and robust services, particularly in tourism and the financial sector.”
He added that over the medium term, real GDP is expected to grow around 3pc, primarily driven by the non-hydrocarbon sector, which is projected to account for nearly 90pc of the economy by 2030.
In a significant show of stability, the mission noted positive shifts in the kingdom’s financial indicators: The government’s overdraft at the Central Bank of Bahrain (CBB) has declined by 8pc over 2025, and foreign exchange reserves have shown remarkable strength, increasing by 11pc. Furthermore, the current account maintained a healthy surplus, standing at 4.8pc of the GDP in 2024.
The IMF commended Bahrain’s commitment to strengthening its financial foundation and offered a constructive roadmap focused on sustained prosperity. The priority is a multi-year fiscal consolidation package designed to durably bring down debt while smoothing the economic adjustment for businesses and citizens.
Key measures to secure long-term fiscal health include exploring the introduction of a general corporate income tax to boost non-hydrocarbon revenues and reforming energy subsidies while ensuring social transfers are effectively targeted to protect the most vulnerable households.
Mr Bluedorn emphasised the importance of this strategic approach: “To bring debt down durably and reduce risks, the priority is to commit to a steady, multi-year fiscal consolidation package, with efforts appropriately staggered to smooth the adjustment, alongside structural reforms to boost growth.”
He affirmed that the recommended package “would balance growth and equity considerations and fiscal sustainability.”
The mission also lauded the efforts of the CBB and encouraged further development to deepen financial markets and stability. To enhance financial stability, the CBB is encouraged to finalise the ongoing upgrade of the bank resolution and crisis prevention framework.
Regarding structural reforms, Mr Bluedorn said: “Structural reforms to boost labour productivity through human capital and digital infrastructure investments would contribute to growth and ease the necessary fiscal consolidation.”
He added that undertaking these actions in parallel with measures to further enhance its business-friendly environment “would lift Bahrain’s medium-term growth and improve economic resilience.”
The IMF mission expressed sincere appreciation to the Bahraini authorities for their cooperation, hospitality, and ready engagement throughout the constructive discussions.
The mission’s report will be formally submitted to the IMF executive board, with the Article IV consultation scheduled for discussion in January next year.
avinash@gdnmedia.bh
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