Bahraini firms 'to gain from GCC economic boom'
Manama, March 12, 2013
The Gulf countries' demographics and resource wealth will drive rapid economic growth in the region in the coming decades and this growth will offer a range of potential opportunities for Bahraini firms, said an expert.
These opportunities will be mainly strong for firms in the banking sector, as financial intermediation converges with Western standards, and as the growing and increasingly wealthy population looks for more sophisticated investment and savings products to safeguard its wealth for the long term. The strength of Bahrain’s financial industry means that the Kingdom is well placed to take advantage of this," stated Dr Jarmo Kotilaine, the chief economist, Bahrain Economic Development Board (EDB).
Dr Kotilaine was delivering his address at the Bahrain Association of Banks’ CEO Luncheon held in Manama.
He highlighted the excellent opportunities that Bahraini financial services companies will be offered as the GCC takes a larger role in the world economy.
"Thanks to its demographic dynamism and resource wealth, the GCC region will go through a profound economic transformation in the coming decades as its global stature continues to grow," remarked Dr Kotilaine.
The GCC economy is currently worth well over a trillion dollars and this is expected to reach $2 trillion by 2020. This will involve a massive expansion of the regional physical and social infrastructure as the economies diversify away from their traditional reliance on hydrocarbons.
Areas such as financial services will experience particularly fast growth, said the expert.
"These regional trends will create a range of potential opportunities for Bahraini companies. Bahrain is a regional pioneer of economic diversification, as well as the most established financial centre in the Gulf," he added.
According to him, this track record entails a number of competitive advantages, above all the country’s deep and diverse pool of human capital.
"Given the limited scale of the national market, one of Bahrain’s key challenges and opportunities is to capitalize on these regional trends. This in turn can serve as an opportunity for a broader repositioning of many companies in a way that enables them to scale up their strengths in the broader Middle Eastern context and beyond," noted Dr Kotilaine.
The annual pace of economic growth in Bahrain for the first three quarters of 2012 was 4.4 per cent, led by a strong rebound in the non-oil sector of the economy, with overall growth for the year estimated at 3.9 per cent and all main sectors of the economy recording positive growth.
According to him, the growth is also likely to pick up further in 2013 due to recovery in the oil sector and planned large-scale industrial investments and growth in infrastructure spending.
The Bahraini economy is fairly resilient to external shocks and it is currently estimated that real GDP growth will exceed 5 per cent this year.
Earlier this year, Bahrain was ranked first place in the Middle East and 12th place worldwide in the 2013 Wall Street Journal/ Heritage Foundation Economic Freedom Index. In September 2012, the Fraser Institute’s annual Economic Freedom of the World Index ranked Bahrain as the seventh freest economy in the world.
The Kingdom is home to over 400 financial institutions and in the last year, the Kingdom has seen new offices established by a number of firms, including PineBridge Investments, Thomson Reuters and NotzStucki.-TradeArabia News Service