Bahrain’s economy to stabilise at around 2.7%: IMF
MANAMA, May 24, 2023
Bahrain's economic growth is expected to stabilise at around 2.7% over the medium term, an IMF mission said highlighting the kingdom's commitment to its reform agenda.
“Growth is projected to moderate to 2.7% in 2023, with non-oil GDP growing by 3.2% reflecting fiscal consolidation, higher interest rates, and a base effect from 2022 strong growth," said the International Monetary Fund (IMF) mission led by Asmaa El Ganainy, at the conclusion of a visit to Bahrain.
"Nevertheless, significant uncertainty clouds the forecast, including from oil price volatility, international financial turmoil and ongoing tightening, and a slowdown in global growth," it said.
Bahrain had experienced strong growth in 2022, in line with other GCC countries. Continued fiscal reform momentum and high oil prices improved fiscal and external balances, it added.
The kingdom's economy grew by 4.9% in 2022, mainly driven by 6.2% growth in non-hydrocarbon GDP while hydrocarbon GDP contracted by 1.4%, stated the mission, which will be submitting the full report to IMF management and executive board in July.
According to IMF, the non-hydrocarbon growth was mainly driven by public, financial, and hospitality services as well as manufacturing sector. CPI inflation accelerated to 3.6% on average in 2022.
With the economic recovery well under way, ongoing fiscal reforms, and higher oil prices, the state budget deficit declined significantly, narrowing to 1.7% of GDP in 2022, from 6.8% in 2021, while the overall fiscal deficit declined from 11.6% to 6.1% of GDP, it stated.
According to IMF, the government debt declined to 117% of GDP in 2022 from 126 percent of GDP in 2021. The current account improved markedly and posted its largest surplus in decades, estimated at 15.4 percent of GDP in 2022, up from 6.6 percent of GDP surplus in 2021, it added.
According to IMF, the government debt declined to 117% of GDP in 2022 from 126% of GDP in 2021. The current account improved markedly and posted its largest surplus in decades, estimated at 15.4% of GDP in 2022, up from 6.6% of GDP surplus in 2021, it added.
According to the IMF team, the CPI inflation accelerated to 3.6% on average in 2022.
With the economic recovery well under way, ongoing fiscal reforms, and higher oil prices, the state budget deficit declined significantly, narrowing to 1.7% of GDP in 2022, from 6.8% in 2021, while the overall fiscal deficit declined from 11.6% to 6.1% of GDP, they stated.
Government debt declined to 117% of GDP in 2022 from 126% of GDP in 2021. The current account improved markedly and posted its largest surplus in decades, estimated at 15.4% of GDP in 2022, up from 6.6% of GDP surplus in 2021.
The IMF mission stated that the Bahraini authorities remain strongly committed to their reform agenda outlined in the Economic Recovery Plan.
The 2023/24 budget is guided by the Fiscal Balance Program targets, which focus on reducing the fiscal deficit and public debt. Measures include spending restraint and efficiency improvements and increasing the non-oil revenue base.
Fiscal consolidation should continue beyond 2024 with ambitious and growth-friendly reforms to reduce reliance on oil revenue and put debt on a firm downward path, it stated.
A stronger fiscal position would also enhance FX reserve accumulation, thereby supporting the exchange rate peg which remains an appropriate monetary anchor, it added.-TradeArabia News Service
