Bahrain last year saw foreign direct investment (FDI) of $989 million, an increase of 11 per cent from the 2012 level, outpacing global FDI flows which rose by 9 per cent, a report said.

The United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2014 released yesterday (June 24) shows that FDI into Bahrain in 2012 was $891 million, a 14 per cent increase on 2011.

Experts said if a similar growth trend were to continue this year, the inflows would cross the $1 billion mark, reported the Gulf Daily News, our sister publication.

The report was unveiled at an event at the Kempinski Grand Hotel hosted by the Econonomic Development Board (EDB) and Bahrain-based Mena Centre for Investment, which supports the work of the Mena-OECD Investment Programme.

Last year was the second in a row featuring double digit growth in FDI for the kingdom, since the global economic downturn.

The data reflects the sustainable private sector-led recovery taking place in the kingdom, UNCTAD chief of investment Astrit Sulstarova said at the event.

The report also shows that last year Bahrain's inward FDI as a percentage of gross domestic product (55.3 per cent), FDI inflows as a percentage of nominal GDP (3 per cent), and FDI inflows as a percentage of gross fixed capital formation (15.7 per cent) were the highest in the GCC.

This highlights the importance of FDI to Bahrain's economy and emphasises Bahrain's position as one of the most globalised economies in the region with international investors having a high level of integration into the local economy.

"Foreign investment continues to help boost private sector growth in Bahrain and provide Bahrainis with new high value-added jobs," Transportation Minister and EDB acting chief executive Kamal Ahmed said.

"This is a strong volume of FDI and, importantly for us, it is also smart FDI that creates sustainable growth and long-term Bahraini jobs.

Ahmed said it was gratifying to see such confidence in the kingdom from international businesses, many of whom are using Bahrain to locate their regional operations and access the fast growing Gulf market.

"Given the region's strong economic fundamentals and the reforms we have put in place to ensure a favourable environment for international investors, we are confident that this trend will continue," he added.

The EDB, the agency with overall responsibility for attracting inward investment, announced in January that 35 international businesses had established operations in the kingdom last year as a result of its direct outreach activities alone.

The businesses, from North America, Europe and Asia, will create more than 800 jobs in Bahrain over the course of three years across a range of sectors, including financial and professional services, logistics, manufacturing, healthcare and ICT.

Bahrain's economy has experienced a consistent and broad-based rebound in economic activity since the start of 2012.

In 2012 the non-oil sector expanded by more than 6 per cent, helping the overall economy to grow by 3.4 per cent.

This trend continued last year with real GDP growth increasing to 5.3 per cent.

Bahrain's favourable business conditions and strong economic fundamentals have been endorsed by the Heritage Foundation's 2014 Index of Economic Freedom, which saw the kingdom ranked 13th in the world and first in the Mena region.

The report highlights that the kingdom's "transition to greater openness and diversification is based on foundations of economic freedom," and that Bahrain "continues to be a financial hub for dynamic economic activity, with high levels of trade and investment bolstered by a competitive and efficient regulatory environment."

Last year, the Fraser Institute's annual Economic Freedom of the World Index ranked Bahrain the eighth freest economy globally. – TradeArabia News Service