Strong Performance in Non-Oil Sectors Drives Growth
According to official data from the Ministry of Finance and National Economy, Bahrain’s economy expanded by 2.1 percent year on year in the third quarter of 2024. This growth is driven by strong performance in non-oil sectors, which account for a significant portion of the country’s real gross domestic product (GDP).
Non-Oil Sectors Lead the Charge
The non-oil sectors grew by 3.9 percent during the period, accounting for 86.4 percent of real GDP. This is a significant contribution to Bahrain’s economy and reflects the country’s efforts to diversify its revenue streams away from oil.
Key Contributors:
- Information and Communication Sector: Surged 11.9 percent year on year, supported by increased mobile and broadband subscriptions.
- Financial and Insurance Activities: Performed strongly, growing by 5.8 percent.
- Electronic Funds Transfers: Increased by 13.7 percent year-on-year.
- Manufacturing: Expanded by 4.2 percent, aided by higher production at the Bapco Refinery.
- Wholesale and Retail Trade: Grew by 2.1 percent, bolstered by a significant rise in e-commerce transactions.
Oil Sector Challenges
Despite these gains, Bahrain’s economy faced challenges in the oil sector, where activities contracted by 8.1 percent year on year. This contraction was due to maintenance activities at the Abu Sa’afa field and declining global oil prices.
Oil Sector Headwinds:
- Maintenance Activities: At the Abu Sa’afa field resulted in a year-on-year contraction of oil activities.
- Declining Global Oil Prices: Contributed to a 19.2 percent decline in the value of oil exports.
Trade and Investment Activities
The current account surplus narrowed by 54.5 percent year on year to BD148.6 million ($394.2 million). This was largely due to a 19.2 percent decline in the value of oil exports, while non-oil exports saw modest growth of 1.1 percent.
Trade and Investment Highlights:
- Foreign Direct Investment (FDI) Stock: Increased by 3.5 percent year on year, reaching BD16.5 billion.
- Financial and Insurance Sector: Remained the dominant contributor to FDI, accounting for 67.3 percent of total investments.
- Development Projects: Continued to advance during the quarter, with various projects in sectors such as tourism, healthcare, and industry.
Monetary and Financial Indicators
The broad money supply expanded by 6.1 percent year on year, supported by a 15.6 percent increase in government deposits. Total loans provided by retail banks grew by 4.9 percent year on year, with personal loans comprising nearly half of the total.
Monetary and Financial Highlights:
- Broad Money Supply: Expanded by 6.1 percent year on year.
- Government Deposits: Increased by 15.6 percent.
- Personal Loans: Comprised nearly half of total loans provided by retail banks.
Labor Market and Training
The labor market recorded a 1.7 percent increase in the number of Bahrainis employed in the public and private sectors, reaching 153,842. Recruitment under the Economic Recovery Plan met 98 percent of its annual target for 2024, while over 13,679 Bahrainis received training.
Labor Market Highlights:
- Employment Growth: Reached 153,842.
- Economic Recovery Plan: Met 98 percent of its annual target.
- Training and Development: Provided to over 13,679 Bahrainis.
Capital Markets
Bahrain’s capital markets performed well, with the Bahrain All Share Index closing the third quarter at 2,012.77 points, a year-on-year increase of 3.8 percent. The Bahrain Islamic Index recorded even stronger growth, rising by 10.1 percent.
Capital Market Highlights:
- Bahrain All Share Index: Closed the third quarter at 2,012.77 points.
- Bahrain Islamic Index: Recorded a year-on-year increase of 10.1 percent.
- Market Capitalization: Increased by 2.4 percent, reaching BD7.8 billion.
Global Competitiveness Rankings
Bahrain retained its position as the freest economy in the Arab world and ranked 34th globally in the Economic Freedom of the World report. The nation also climbed eight places to rank 30th in the IMD World Digital Competitiveness Ranking, reflecting significant progress in adopting and leveraging digital technologies.
Global Competitiveness Highlights:
- Economic Freedom: Bahrain retained its position as the freest economy in the Arab world.
- Global Rankings: Ranked 34th globally in the Economic Freedom of the World report.
- Digital Competitiveness: Climbed eight places to rank 30th in the IMD World Digital Competitiveness Ranking.