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Country Risk Service Bahrain Updater

  • ID: 2101500
  • Country Profile
  • August 2020
  • Region: Bahrain
  • 19 Pages
  • The Economist Intelligence Unit
Sovereign risk is B-rated, but on the cusp of a CCC rating. As a result of the coronavirus (Covid-19) pandemic, the economy is estimated to be in a deep recession. An oil price slump has widened the budget deficit, and access to finance is increasingly constrained as investor sentiment towards Bahrain grows cautious.

The currency risk rating is at B. Tighter financing conditions are set against a dependence on hydrocarbons and thus a widening external imbalance, as oil prices have plummeted. The rating reflects Bahrain's determination to maintain its currency peg to the US dollar, with ongoing financial support from fellow Gulf states. However, the main risk stems from dangerously low foreign reserves (at well under two months of import cover), which leave the dinar vulnerable to speculative pressure.

Banking sector risk is B-rated. Asset prices have crashed, and the banking sector has considerable exposure to the real estate and construction sectors. Commercial banks' negative net foreign asset position is also a point of risk amid tighter international financing conditions for Bahrain.
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Country Risk Service Bahrain Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2020-24: Political stability

Central scenario for 2020-24: Election watch

Central scenario for 2020-24: International relations

Central scenario for 2020-24: Policy trends

Central scenario for 2020-24: Fiscal policy

Central scenario for 2020-24: Monetary policy

Central scenario for 2020-24: Economic growth

Central scenario for 2020-24: Inflation

Central scenario for 2020-24: Exchange rates

Central scenario for 2020-24: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service
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