Telecoms and transport drive Bahrain’s non-oil growth

Unsplash/Ian Taylor

• Non-oil 83% of GDP in Q2
• GDP grew 2%
• Transport and telecoms up 13%

Bahrain’s non-oil sector grew to 82.9 percent of the kingdom’s GDP in the second quarter of this year, driven by sharp increases in the transport and telecommunications industries.

Bahrain’s GDP was up 2 percent in Q2. This included a 2 percent increase in the non-oil sector and a 2.2 percent rise in oil-related activities, according to data released by the Bahrain Information and eGovernment Authority.

Transport and telecommunications was the fastest growing area at 13.3 percent, reflecting increased cross-border mobility, the report said. 

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Within the sector, container vessel traffic grew by 52 percent year on year. Bahrain International Airport recorded a 20 percent increase in the total number of passengers compared with Q2 2022.

Telecommunications witnessed a 12.8 percent year-on-year increase in mobile subscribers.

The hotels and restaurants sector grew by 9.6 percent, as numbers of four- and five-star hotel guests increased by around 29 percent; boosting occupancy rates by 8 percent.

The kingdom is aiming for more than 14 million visitors by 2026, up from 9.9 million last year.

Real estate and business activities recorded a 4.9 percent rise, supported by an increase in the value of real estate trading at 19 percent year on year.

Legislative encouragement

Favourable economic legislation is expected to further stimulate activity in the real estate market. This includes the foreign ownership law introduced in 2016, the creation of 10 freehold zones, and the introduction of the Golden Residency Visa in 2022, which grants long-term residency.

“We have noted a surge in demand for affordable housing units in Bahrain, as many families are looking for both comfortable and cost-effective homes owing to the current global economic landscape, increased cost of credit and high residential prices,” said Faisal Durrani, Knight Frank partner and head of Middle East research.

The contribution of the financial corporations sector to the country’s GDP reached 17.3 percent in Q2, on year-on-year growth of 4.7 percent. 

There was growth in both the offline and online shopping sectors as total mall footfall increased by 20.7 percent, while the value of point of sale and e-commerce transactions was up 5.2 percent.

This resulted in growth of 4.7 percent in the trade sector year-on-year for the second quarter.

However, a drop in global aluminium prices led to a 0.9 percent drop in the manufacturing sector over the period.

The report revealed that foreign direct investment inflow exceeded BHD1.3 billion ($3.4 billion) during the quarter, bringing up the total investment balance to BHD14.7 billion, growing by around 14 percent year on year from BHD13 billion in Q2 2022. 

Record pace of growth

The financial and insurance services posted the highest increase in FDI inflows at BHD983 million, while the real estate activities sector stood at BHD129 million.

Bahrain’s economy registered its fastest pace of real GDP growth (4.9 percent) in a decade last year, driven by a broad rebound of regional tourism, transportation and hospitality, amid higher oil prices.  

Bahrain also posted a record current account surplus of 15.4 percent of GDP in 2022, bolstered by high oil prices and a boost in aluminium production.

Ratings agency S&P said in May this year it expects Bahrain’s economic growth to decelerate to about 2.8 percent in 2023.