Bahrain’s economy is expected to grow by slightly more than 4 percent this year, the Economic Development Board (EDB) said on Sunday, while it sees the country’s financial sector recovering only slowly.
“The EDB expects the Gross Domestic Product (GDP) of Bahrain in the current year of 2010 to increase a little bit more than 4 percent,” it said in a statement.
EDB’s forecast is in line with the central bank’s expectation of about 4 percent economic growth in Bahrain this year, compared with 3.2 percent in 2009.
The EDB, a government body responsible for setting Bahrain’s economic policies, also said that GDP grew 5.2 percent during the first quarter year-on-year and 1.4 percent compared to the last quarter of 2009.
It said that growth over the coming years would be driven by household consumption, while investments would remain subdued as investors are still suffering from a regional property crash late in 2008.
The EDB also said in its statement it expected the country’s financial sector to recover only slowly, in a rare official acknowledgement of the troubles at Bahraini investment houses.
Companies such as Arcapita and Ithmaar were badly hit by the property crash and the subsequent freeze in regional investment markets as they relied on raising money for property and private equity projects.
“Given the weight of offshore property development in the portfolio of the Bahrain-based wholesale banking sector, the EDB expects the finance sector to recover only slowly from the downturn,” the EDB said.
Bahrain has established itself as an off-shore financial hub for the oil wealth accumulated in particular in Saudi Arabia and Kuwait, and the financial industry accounts for around a quarter of its GDP.