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Country Forecast Bahrain

  • ID: 2138642
  • Country Profile
  • Region: Bahrain
  • 48 Pages
  • The Economist Intelligence Unit
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Background: Bahrain became independent from the UK in 1971. The increasingly despotic rule of the country's first ruler, Isa bin Salman al-Khalifa, led to a violent backlash by predominantly Shia elements during the 1990s. Following the death of Sheikh Isa in 1999, his son and successor, Hamad bin Isa al-Khalifa, has attempted to implement a programme of gradual political reform, but has made only halting progress. Widespread protests in early 2011 brought about a security crackdown.

Political structure: Bahrain ceased to be an emirate and became a constitutional monarchy in February 2002, as part of King Hamad's effort to distance himself from the autocratic rule of his father. Although constraints on press freedom and political activity were loosened to some extent after King Hamad's accession, they have since been reimposed following the protests of early 2011, and control over policymaking remains in the hands of the king and the ruling Al Khalifa family. The bicameral National Assembly (parliament) came into being in 2002, but the opposition objected to the limits on the power of the elected house (which is largely offset by a strong upper house appointed by the king). Parliament can propose (but not draft) legislation and has the right to amend and reject the budget.

Policy issues: The government is seeking to reduce unemployment by promoting private-sector growth, offering incentives to firms to hire Bahrainis and increasing the local skills base. However, persuading businesses to replace cheaper expatriate workers with more expensive local labour will prove difficult, and with the country's hydrocarbons reserves limited and dwindling, the government will be unable to guarantee local citizens employment in the public sector.
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Country Forecast Bahrain

Bahrain--highlights: Political outlook

Bahrain--highlights: Business environment outlook

Bahrain--highlights: Economic outlook

Bahrain--highlights: Demographic outlook

Bahrain--highlights: Market opportunities

Bahrain--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability

Political outlook: Political and institutional effectiveness

Political outlook: Election watch

Political outlook: International relations

Business environment outlook: Business environment rankings
Policies and regulations improve in many key areas

Business environment outlook: Bahrain's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Technological readiness

Business environment outlook: Macroeconomic environment
Despite a more positive oil outlook, the public finances will remain strained

Business environment outlook: Policy towards private enterprise and competition
Privatisation and PPP projects are on the agenda

Business environment outlook: Policy towards foreign investment
Qatar dispute and domestic instability will continue to weigh on FDI inflows

Business environment outlook: Foreign trade and exchange controls
Foreign trade and exchange regime to remain open
The currency peg remains threatened by weak foreign-exchange reserves

Business environment outlook: Taxes
Bahrain may have to introduce more taxation, quasi-taxation or charges

Business environment outlook: Financing
Central bank to prioritise updating regulatory framework

Business environment outlook: The labour market
Fines continue for Bahrainisation violations
Flexible work permits introduced that do not require corporate sponsorship

Business environment outlook: Infrastructure
A new round of infrastructure funding from the GCC is unlikely

Business environment outlook: Technological readiness
Mobile operators to launch 5G services by end-2018

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in Bahrain
Stocks and flows
Origin and distribution
Determinants
Impact
Potential

Demographic assumptions
Expatriate hiring for infrastructure projects will drive population growth
Bahrainisation efforts unlikely to reduce expatriate population

Market opportunities: Market outlook
Consumer demand will be muted in the short term but offers long-term promise
Risks to developing the tourism sector will remain

Long-term outlook: The long-term outlook

Long-term outlook: Long-term trends
Climate change and sustainability
Technological developments

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data
Abbreviations

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model
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