International Trade in Bahrain

News Related to International Trade in Bahrain

Business outline for Bahrain

Economic Overview

In a region experiencing an oil boom, Bahrain has the fastest growing economy in the Arab world. Production and refining of oil account for nearly 70% of the country's income. Moreover, Bahrain is striving to position itself as the regional center of financial, telecommunications, and transportation services. Slightly affected by the economic crisis, Bahrain experienced a 3.1% growth in 2009 and 4% in 2010, driven by the increase in oil prices, the global economic recovery and fiscal stimulus measures. The future outlook is positive.

The government of Bahrain is actively pursuing the diversification and privatization of its economy in order to reduce the country's dependence on oil. Even though the production of crude oil will slowly decrease in the future years, the economic situation in Bahrain remains healthy for the time being. As a fact, the dynamism of activities outside the hydrocarbons should remain such as the degradation of the main indicators of the Kingdom remain limited. The situation of foreign accounts should remain comfortable. The main unknown outcome depends on capital moves and the results of the global balance. Corruption at a high level, unemployment, depletion of oil and underground water resources are major long-term economic problems.

Bahrain faces a high unemployment rate, especially among young people.

FDI in Figures

In terms of GDP percentage, the FDI flux has decreased. Due to the global financial crisis, the FDI influx into Bahrain shrunk significantly in 2009 and should only be recovering slowing in the coming years, depending on the economic recovery. The FDI are impeded by the country's very slow privatization program, the small scale of the domestic market and the inflexible labor market.

However, Bahrain benefits from one of the most open economic environments and a regulatory framework attractive to FDI searching for a gate into the Gulf and Middle East markets. Ranking #16 on the world's list, Bahrain is also the only country in the MENA (Middle East and North Africa) region to be included among the 20 most liberal economies of the world. Bahrain has the lowest tax rates in the Gulf area, without restrictions of free-zones. 100% ownership is authorized in about 95% of the economic activities, without the need for a local partner. The excellence of the country's logistic infrastructure is also one of the main attractive factors of the country (Bahrain's airport, the new port Khalifa bin Salman, the bridge of King Fadh, the future bridge of the Friendship between Bahrain and Qatar projected for 2013). The Kingdom is currently investing 2.9 billion USD in improving its infrastructures. Finally, the access to new information technologies and communications is widely spread in the Kingdom.

The service sector remains the main one for FDI. Kuwait and Turkey are the main two investing countries in Bahrain.

Foreign Trade Overview

Bahrain's market is quite open and has established one of the most diversified economies in the region. Foreign trade represented more than 170% of the GDP in 2008.

The country has recorded a substantial trade surplus. The drop of oil prices should notably affect the trade balance of Bahrain in the next following years.

The country remains heavily dependent of its oil industry and industrial diversification is very limited. In the recent years, the percentage of oil products exports increased from 66% to 80%. Other major exports are metal products, in particular aluminum, chemical products (essentially created from petrochemicals) and textiles. 

Imports of  Saudi crude oil represent more than half of Bahrain's total imports. The non-oil imports remain very stable. These are equipment goods (machinery, appliances, electric equipment), chemical products, transportation and food products. 

The main trading partners of Bahrain are the countries of the Gulf Cooperation Council (Saudi Arabia, the United Arab Emirates, Kuwait, Oman and Qatar), the United States and Japan.