Bahrain's gross domestic product (GDP) is expected to grow more than five per cent this year, said the chief economist of Bahrain Economic Development Board.

Dr Jarmo Kotilaine said the oil sector normalisation is likely to be the key growth driver this year, speaking to our sister publication the Gulf Daily News on the sidelines of the ninth Annual World Islamic Funds and Financial Markets Conference (WIFFMC) 2013 in Bahrain.

"Growth rebounded clearly last year, led by a strong non-oil sector. It was held back by technical disruptions in the oil sector,” he said.

"Output from the Abu Safa oilfield, which Bahrain shares with Saudi Arabia, was below normal for most of last year because of technical problems, hurting growth. But the problems were fixed in November and this will boost economic growth this year, along with higher output from an onshore Bahraini oilfield.”

According to him, bank lending in the kingdom too has been increasing at a comfortable pace and bankss remain highly liquid.

The activity in the Gulf economies is holding up well, buoyed by fiscal stimulus, he said, adding that the Gulf economies are expected to outperform the rest of the region.

Dr Kotilaine sees regional government spending staying strong through the year.

"Growth is becoming less reliant on the oil sector and potentially government spending as well.

On the larger Mena region, citing data, he said Mena countries grew at 4.8 per cent from 2001 to 2012, compared with only 2.4 per cent in Organisation for Economic Co-operation and Development economies.

"By removing trade barriers and refocusing on the regional market, there is a large potential to boost trade and create investment opportunities," he added.

"The Mena region, with a population of around 400 million, has a high population growth of 2 per cent compared with global growth rate of 1.1 per cent.

"Today, with half of its population under age 25, Mena has the second youngest population among world regions, after sub-Saharan Africa.

"The urban population is rising rapidly and by 2050 more than 75 per cent of the population will be living in an urban setting compared with 35 per cent in 1960," he said citing World Bank projections.

"The high rate of urbanisation will drive a high demand for provision of adequate infrastructure, health, education and other services such as finance and telecommunications and others," he said.

In his global economic outlook, Dr Kotilaine said he saw moderate expansion with persistent divergence between mature and emerging economies.

"Global oil demand and supply will continue to grow with a generally tight balance," he added. – TradeArabia News Service