Bahrain GDP growth to hit 6% this year: Fitch

Bahrain GDP growth to hit 6% this year: Fitch

Bahrain's real GDP growth will reach above 6% in 2022, buoyed by very strong non-oil growth as tourism-related sectors and real estate and construction post strong performances, says a Fitch Ratings report.

However, from 2023, the agency forecasts a growth of just over 2% per year, as upstream hydrocarbon activity remains flat, refinery production ramps up and lower oil prices and fiscal consolidation dampen demand.

The agency expects inflation to remain lower than in peers (4.2% in 2022), in part due to the impact of subsidies.

Fitch Ratings has affirmed Bahrain's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B+' with a Stable Outlook. Bahrain's ratings are supported by strong financial backing from partners in the GCC and high GDP per capita and human development indicators even relative to 'BBB' medians, it said.

The budget deficit will narrow significantly in 2022, to 3.6% of GDP from 9.6% of GDP in 2021, owing to the rebound in global oil prices, recovery of the domestic economy and the doubling of the VAT rate to 10%, it said.

The agency forecast that the general government budget deficit will widen to 4.1% of GDP in 2023, from 3.6% in 2022. Oil revenue will contract by about 9% under its assumption