Bahrain rides the wave: steady growth ahead

TDT | Manama

Email : editor@newsofbahrain.com

Bahrain’s economy is set to expand 3.3% in 2025, the IMF says, as stronger oil output and steady non-oil activity support growth.

In its October report, Regional Economic Outlook: Middle East and North Africa, the fund raised GCC growth forecasts to 3.9% for 2025 and 4.3% for 2026. For Bahrain, it projects oil growth of 1.8% and non-oil growth of 3.6% next year.

Bahrain’s fiscal deficit is expected to reach 10.7% of GDP in 2025, up slightly from 10.6% in 2024, before easing to 9.9% in 2026. This assumes stronger oil revenues alongside ongoing efforts to rein in spending and improve public financial management.

Across the GCC, the removal of OPEC+ voluntary production limits is expected to boost oil output by around 4.2% in 2025. Consequently, oil prices are projected to trade between US$60 and US$70, averaging US$69 next year and easing to US$66 in 2026. The fund cautions that a rapid return of supply could push prices lower if demand softens, while geopolitical tensions or extra sanctions on Russia or Iran could temporarily drive prices higher, improving exporters’ budgets and surpluses.

Non-oil activity to grow 3.8%

Non-oil activity in the region is projected to grow 3.8% in 2025, supported by economic reforms and efforts to diversify beyond oil. Among GCC countries, growth rankings are expected as follows: UAE 4.6%, Qatar 4.4%, Saudi Arabia and Oman 3.6%, Bahrain 3.4%, and Kuwait 2.7%.

Inflation is expected to continue easing through 2025 and 2026, as falling energy costs and lower import prices are reinforced by firm central bank policies. Most GCC countries are projected to settle between 1.7% and 2.0% in 2025, with readings near targets in 2026.