Bahrain has the lowest production and reserves of hydrocarbons among the Gulf states, yet it is one of the most financially forward-thinking, according to a report.

This is one of the conclusions of business services firm KPMG's Succeeding in a Changing World report that interviewed 1,500 leading executives across 22 countries in Europe, the Middle East and Africa.

"Having long since realised that it cannot rely on oil and gas exports to ensure its continuing prosperity, the kingdom has strived over the past several decades to diversify its economy away from the extraction of natural resources and towards a more sustainable model of development based on manufacturing and the provision of services, especially finance," the report said.

"In doing so, the kingdom has earned a reputation for being a regional trailblazer and built the GCC's most open economy," it added.

Despite the fact that the unrest had a negative impact on short-term growth, the fundamentals upon which the country's economy is based remain unchanged, it said.

"Going forward, government and regional investments are expected to have an immediate impact on Bahrain's economic recovery," it added.

"Further reforms, however, and a planned revision of the national economic strategy, will be crucial to the kingdom's long-term growth and prosperity.

"Within this context, many government institutions, agencies and private businesses are looking at their internal reform agendas. For many, this includes rolling out transformation programmes to deliver operational efficiencies to enhance performance," the report said.

Most senior executives surveyed are focusing on business performance management and aligning their cost base to their organisations' future strategy and ensuring cash and working capital, said KPMG Fakhro in Bahrain's head of advisory Narayanan Ramachandran.

"Bahrain-based respondents place a far greater emphasis on addressing risk throughout the organisation, accounting for 42 per cent of those interviewed compared to 30pc across the survey, demonstrating the increasing emphasis on corporate governance and financial risk management," he added. – TradeArabia News Service