Manama : The Ministry of Finance and National Economy released the Bahrain Economic Quarterly Report for Q1 2026 on its website www.mofne.gov.bh.
The national economy recorded strong performance in January and February 2026, before it was impacted in March 2026 due to the hostile Iranian aggression on the Kingdom. According to the preliminary national accounts data released by the Information & eGovernment Authority, GDP at constant prices contracted by 3.8% YoY in Q1 2026, driven by a 37.2% decline in oil activities, primarily due to the imposed restrictions on maritime traffic through the Strait of Hormuz, which affected export capacity, alongside scheduled maintenances. In spite of local circumstances, non-oil activities continued to expand, recording growth of 2.2% YoY. At current prices, GDP contracted by 2.7% YoY, caused by the 31.1% decline in oil activities, compared to a 1.9% increase in non-oil activities.
The report highlights the pivotal role of non-oil activities, which contributed 90.1% to GDP at constant prices during Q1 2026, with 9 out of 13 non-oil economic activities recording positive growth. Among non-oil activities, Financial and Insurance Activities remained the largest contributor to GDP, accounting for 19.7% and recording an 8.6% YoY increase, followed by Manufacturing at 14.6%, Public Administration at 9.0%, and Construction at 7.0%. Meanwhile, the remaining non-oil activities each contributed between 2% and 5% of total real GDP, reflecting the Kingdom’s diversified economic structure.
The report also showcases a 2.6% YoY increase in total inward FDI in Q1 2026, bringing total FDI stock to BHD 17.6Bn.
The Kingdom of Bahrain continues to achieve significant progress across a range of international economic and developmental indicators, reflecting the resilience of its economy and ongoing enhancements to the business environment. Bahrain ranked 1st globally in 67 indicators, is among the top five globally in 120 indicators, and among the top 10 globally in 206 indicators.
The Kingdom ranked 1st globally in Public-Private Partnerships in the World Competitiveness Ranking 2026, published by the International Institute for Management Development (IMD). Bahrain also secured the 1st place globally in Islamic Finance Governance, as per the State of the Global Islamic Economy Report 2025/2026 released by DinarStandard. Furthermore, the Kingdom of Bahrain ranked 1st globally for Attracting Investments, in the Chandler Good Government Index 2026, published by the Chandler Governance Group. Additionally, Bahrain advanced 3 positions in the ICT Development Index 2026, issued by the International Telecommunication Union (ITU), ranking 6th globally among 159 economies.
