Bahrain’s GDP growth to decelerate to 2.2% this year: ICAEW

Bahrain’s GDP growth to decelerate to 2.2% this year: ICAEW

Bahrain’s non-oil recovery is slowing after a decade-high pace in 2022 and without significant reforms to the economy, Bahrain’s GDP growth would continue to slow to an average of only 1% a year in 2025-30. Bahrain’s GDP growth will decelerate to 2.2% this year, likely caused by a slowdown in global activity, lower oil prices and the easing in tax receipts. This follows the fast-paced growth in 2022, with Bahrain’s economy expanding by 4.9%, the fastest in nine years. This is according to the latest Economic Insight report for the Middle East, commissioned by ICAEW and compiled by Oxford Economics. Economic growth Bahrain’s economic growth last year was primarily driven by the doubling of the VAT rate, rising to 10%. Excluding the tax effect, the economy expanded by 3.3%, driven by Bahrain’s non-oil sector, including government services, the finance sector and manufacturing. The country’s oil sector did not perform as strongly, shrinking 1.4% year-on-year, despite a 7.8% year-on-year increase in production and a sharp rise in global oil prices. The report indicates Bahrain's fiscal position is likely to transition into a deficit in 2024. This underscores the pressing need for further fiscal adjustments, despite the windfall from higher oil prices