Manama : Bahrain’s economy is on a strong footing after last year growing at its fastest pace in a decade, driven by continued fiscal reforms and improved finances amid higher oil prices, the International Monetary Fund said.
The kingdom’s economy, which expanded by 4.9 per cent in 2022, spurred by a 6.2 per cent surge in non-oil gross domestic product, is projected to moderate to 2.7 per cent in 2023, the IMF said in a statement at the conclusion of Article IV consultations with Bahrain.
Non-oil GDP this year is expected to moderate to 3.3 per cent, reflecting “fiscal consolidation, higher interest rates, and a base effect from 2022 strong growth”.
The non-oil sector’s contribution to real GDP reached an all-time high at 83.1 per cent last year. Higher oil prices following Russia’s military assault on Ukraine also supported its economy.
In May, S&P Global Ratings affirmed Bahrain’s credit rating and maintained the kingdom’s positive outlook on reform momentum and continued financial sector stability.
To strengthen its economy, Bahrain unveiled a major economic reform plan in 2021 that seeks to invest about $30 billion in strategic projects to drive post-coronavirus growth, boost employment for citizens and attract foreign direct investment.
As per the multi-year plan, the government adopted cost rationalisation measures and aims to create more than 20,000 jobs for citizens annually and train 10,000 people through its Tamkeen programme.
Fiscal consolidation and structural reforms will support the kingdom’s external position, while its monetary policy should continue to follow the US Federal Reserve.
Bahrain’s banking system is healthy with ample buffers and has so far withstood the phasing out of Covid measures and tightening financial conditions, the IMF said.
