Bahrain ‘rising star of global trade’, report

Bahrain’s reforms to move its economy away from oil reliance have made it a leader in terms of “improving diversification” in the Middle Eastern markets, new research from Standard Chartered has shown. The Trade20 index that examines the progress of markets around the globe identifies Bahrain as one of the rising stars of global trade. 

Bahrain’s efforts to “move its economy away from a reliance on oil and develop its manufacturing, finance and service sectors are paying off,” the report says.   Oman and the UAE are the other economies in the Trade20 index from the Middle East.   “All three markets have become important trading hubs,” the index released last week at Sibos in London says identifying the improvements in export diversity. 

Trade20 examines the progress made across 12 metrics by 66 economies to reveal the 20 economies that are most rapidly improving their trade growth potential.  The index judges the potential for an individual economy to grow its trade rather than outright trade potential. 15 of the Trade20 markets identified are in Asia-Pacific, Africa or the Middle East as emerging markets dominate. Almost half of the index is made up by Asia, with India, China, Vietnam, Indonesia, Thailand, Hong Kong, Sri Lanka, Singapore and the Philippines making it into the top 20.

Thinking beyond oil

Middle Eastern markets are making strides to expand their exports beyond oil, the report says attributing the performance of Bahrain, Oman and the UAE to “fast progress in economic diversity.” 

The report, however, warns Bahrain and Oman to prioritise their diversification agendas citing “lower oil wealth, rapid accumulation of debt, and questions over the sustainability of their currency pegs” as concerns to address. 

While describing the trade readiness momentum in the Middle Eastern markets as ‘impressive, the report sees it as a product of “rapidly gathering pace of e-commerce market” and increasing the pace of infrastructure investment.

UAE’s infrastructure

In infrastructure investment, UAE leads the way due largely “to the government’s energetic focus on infrastructure improvements,  The report says: “UAE’s Vision 2021 focuses on enhancing infrastructure, providing grants for road, bridge, harbour and dam development and increasing investments in water and electricity projects.” Oman, Trade20 says, is showing progress in both economic diversity and trade readiness.

“It is implementing a diversification strategy that aims to focus on non-oil sectors such as manufacturing, logistics, tourism, fishing and mining, capitalising on its natural resources.” Oman is also making “efforts to reduce the barriers to doing business, streamlining the startup process and making border clearance easier.” Report says: Oman and Bahrain’s diversification away from oil, or the UAE’s improvements to trade readiness is “laying the foundations for future trade performance improvements.”

The achievements, however, does not apply to the region as a whole, the report warns adding that the markets in the Middle Eastern region perform “relatively poorly in terms of economic dynamism, due to limited GDP and export growth and a lack of inward FDI momentum.” 

On a global scale, the report identifies China and India as showing rapid progress “even from an already-high starting point.” Established exporters like Vietnam, Indonesia and Thailand are also improving as are smaller economies such as Côte d’Ivoire, Kenya, Ireland and Oman.