Bahrain’s economy on track to grow 3% this year, projected to rise to 3.5% by 2025

TDT | Manama

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Bahrain’s economy is expected to grow by 3% this year, with the growth rate rising to 3.5% in 2025, driven by financial services, technology, and industrial expansion.

This is based on the International Monetary Fund’s report following the conclusion of its 2024 Article IV consultation mission in the Kingdom. Positioned as a hub for international investors, Bahrain is embracing energy transformation and pushing ahead with plans to broaden its economy.

Tourism targets and transport upgrades are also expected to play a key role in shaping its future.

Guided by Economic Vision 2030, Bahrain is forging a path towards long-term development.

Growth stems from a dynamic private sector, bolstered by rising foreign investment and steady economic reforms.

With inflation low and interest rates adjusted favourably in 2024, Bahrain’s appeal to businesses is steadily increasing.

The Kingdom has also taken strides to insulate its economy from global energy price swings through multi-sector expansion.

Despite financial hurdles, Bahrain’s welcoming investment environment and skilled workforce leave it well-positioned to attract global companies.

Expanding stock markets and diversifying the economy remain priorities on the government’s agenda.

Efforts to move away from reliance on hydrocarbons are well underway.

Bahrain has set targets to cut carbon emissions by 30 per cent by 2035 and achieve carbon neutrality by 2060.

Programmes such as the Green Factory Label, introduced in December 2023, underline Bahrain’s determination to tackle environmental challenges.

Collaboration

Renewable energy projects, water conservation initiatives, and sustainable urban development are all part of this effort, with government and private sector collaboration being crucial to their success.

The financial sector continues to play a central role in Bahrain’s economy, contributing 17.8 per cent of GDP in 2023.

Financial technology is driving progress, widening banking access for underserved communities.

The Central Bank’s forward-thinking regulations have encouraged the growth of open banking, payment systems, and digital assets.

Landscape

Start-ups and established firms alike are helping to shape a robust financial landscape, ensuring the sector remains a key engine of growth.

Bahrain’s insurance industry has seen steady growth, with both conventional and Islamic providers reporting strong results in 2023.

The introduction of mandatory health insurance in early 2025 is expected to further strengthen the market, with projections suggesting it will grow at an annual rate of 2.6 per cent through to 2028, reaching an estimated $800 million.

As the industry develops, mergers and acquisitions are expected to enhance efficiency and competitiveness.