São Paulo – Bahrain reported solid growth last year, at 4.9%, and its economy could continue to expand in 2023. In a report released this Tuesday (11), the International Monetary Fund (IMF) predicted a 2.7% advancement in the Gulf country’s Gross Domestic Product (GDP) this year.
The organization stated Bahrain’s growth in 2022 was in line with the other Gulf Cooperation Council (GCC) countries.
Last year, expansion was mainly attributed to the non-oil sector, which advanced 6.2%, while hydrocarbons retreated 1.4%. Public, financial, and hospitality services and manufacturing industries drove the former’s performance.
Last year, Bahrain experienced accelerating inflation. Prices went from a 0.6% drop in 2021 to a 3.6% increase in 2022. However, with the ongoing economic recovery, fiscal reforms, and high oil prices, the state budget deficit fell from 6.4% of GDP in 2021 to 1.2% last year.
The IMF stated Bahrain’s banking system remains resilient and withstood the phasing out of COVID measures and tightening financial conditions.
Regarding growth in 2023, non-oil revenue could also have an important role, expected to increase by 3.3%, reflecting fiscal consolidation and solid growth in 2022. Interest rates could be higher.
The IMF recalls, however, that significant uncertainties could meddle with the forecast, including oil price volatility, international financial turmoil, and a slowdown in global growth.
According to the fund, Bahraini authorities remain firmly committed to fiscal and structural reforms, as defined in the Fiscal Balance Program and Economic Recovery Plan, which aim to reduce the budget deficit and public debt.
Translated by Elúsio Brasileiro
