Structural drivers spur non-oil growth
Manama : Bahrain’s non-oil sector grew by 3.6 per cent in the second quarter of 2016, a marked acceleration from 2.7pc in the first three months of the year, according to the latest Bahrain Economic Quarterly, released by the Economic Development Board (EDB).
The sector, which accounts for more than 80pc of GDP, has demonstrated continued resilience in the face of lower oil prices and considerable global economic volatility. This momentum has been seen across a number of sectors and is strongly underpinned by the ongoing implementation of a $32bn pipeline of strategically significant infrastructure projects in the Kingdom.
For instance, the total cumulative value of the active projects financed by the GCC Development Fund has reached nearly USD4billiion, more than tripling in less than a year. Also a number of real estate, transportation, and manufacturing projects, such as ALBA Line 6, are progressing well.
Non-oil growth has been broad based. The fastest growing individual sector during the second quarter of 2016 was Social and Personal Services, a category dominated by private education and health care. It has been consistently one of the most dynamic sectors of the economy in recent years and grew by an annual 9.9pc in Q2.
The Financial Services sector has continued to perform well with a 4pc pace of real growth in Q2. Likewise, the Manufacturing sector expanded by 3.3pc in Q2 in a near-tripling of the pace seen in Q1.
Growth across the private sector was also supported by growth in bank credit, with the average annual rate of credit growth during the first half of the year reaching 7.2pc, and the cost of credit remaining stable, declining slightly in the course of the first half of the year.
EDB Chief Executive Khalid Al Rumaihi commented on the findings of the BEQ report: “The resilience the economy has demonstrated reflects the strength and maturity of the non-oil private sector in Bahrain – we are very pleased to see continued growth even in the face of considerable headwinds.
“In the coming years we expect the GCC economies to move from a model of extensive growth, driven by increased people, land and capital, to productivity-led growth. The large infrastructure investments we are currently seeing and the strength of the non-oil private sector will be important in creating opportunities for investors and ensuring that Bahrain continues to thrive.”
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