Economy overview

Bahrain has a mixed economy, with government control of many basic industries, including the important oil and aluminum industries Bahrain is a banking and financial services centre; it’s small and reasonably prosperous economy is less dependent on oil than most Gulf States.

Bahrain was one of the first states in the Gulf to discover oil and to build a refinery; as such, it benefited from oil wealth before most of its neighbors; however the kingdom has become one of the Arabian Gulf's most advanced economies and most progressive political systems since gaining its independence from Britain in 1971 Bahrain’s economic success is partly a result of the government’s initiatives to diversify its economy.

The government of Bahrain is actively pursuing the diversification and privatization of its economy in order to reduce the country's dependence on oil; Bahrain's development as a major financial center has been the most widely indication aspect of its diversification effort. International financial institutions operate in Bahrain, both offshore and onshore, without impediment.

Trade

Bahrain's market is open and has established one of the most diversified economies in the region. 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.  

Sector of opportunity The Government of Bahrain, over the years, has maintained a business friendly industrial environment to encourage industrial investors and entrepreneurs to set up viable industrial projects in Bahrain. The kingdom of Bahrain has been ranked highly by several international organizations and has a reputation for offering attractive industrial opportunities to both local and international investors. This attached with an efficient banking and communication system, absence of taxation & exchange controls and a friendly society makes Bahrain an ideal place to invest in and do business. The kingdoms unique mix of market access, skilled labor, low operating costs and zero corporate taxes, combined with an excellent lifestyle offer, has stimulated investment across a wide range of sectors. Our overall economic strategy is focused on the creation of high-quality jobs in skilled and sustainable industries.

Economic forecast

Today, Bahrain possesses the most diverse economy in the Gulf States and includes financial, aluminum and tourism sectors which accounts for 75 percent of Bahrain’s GDP. One key driver to Bahrain’s economic growth in the future is the transformation into a high-tech service industry, particularly in the finance sector. The private sector will also play an important role in the future of Bahrain’s economic growth. At present, the private sector accounts for more than half of Bahrain’s GDP. According most recent published data by the IMF, Bahrain’s unemployment rate in 2005 was 15 percent of its labor force. However a 2010 report by the Gulf News quoted Bahrain’s labor minister, Majeed Al Alawi, stating Bahrain’s unemployment rate had fallen to 3.7 percent in February 2010. In addition to the Unemployment Insurance System (UIS), Bahrain’s decision to diversify its economy has also created new job opportunities for Bahrainis. The Inflation rate (average consumer price change) in Bahrain was 2.643 percent in 2010, down from 2.79 percent in 2009, and is expected to plateau at 2.5 percent from 2011 to 2015.

Vision 2030 is a comprehensive economic vision for Bahrain providing a clear direction for the continued development of our economy and at its heart is a shared goal of building a better life for every Bahraini.