Bahrain’s GDP growth to remain stable this year

Manama : Bahrain’s GDP growth will reportedly remain unchanged this year at 2.9 per cent, according to a report by Institute of Chartered Accountants in England and Wales(ICAEW).

The report ‘Economic Insight: Middle East Q4 2016’, stated that the GDP growth in Bahrain should hold up in 2016, unchanged from 2015 at 2.9pc, thanks to GCC support and higher oil production. However, with oil output expected to fall, prices remaining low and spending dropping back, growth is expected to slow to 1.7pc in 2017.

The report also commented on the GDP growth of other GCC countries. GDP in Saudi Arabia is expected to rise 1.2pc in 2016 and a similar rate in 2017, due to flatter oil production next year. 

UAE is expected to see GDP growth of 2.3pc this year, rising to 2.7pc in 2017 as both oil and non-oil sectors improve. GDP growth in Oman is expected at 2.3pc in 2016, slowing further in 2017 to just 1.7pc. 

With government spending forecast to drop 10.2pc in 2016, non-oil GDP growth in Qatar is expected to slow to 5.8pc this year, but will pick up to 6.6pc in 2017. 

The overall GDP in Kuwait is expected to grow by 2.8pc in 2016 due to government investment, continued employment growth
and subsidy cuts,  the report stated.

It further said that GCC countries must substantially raise non-oil government revenues to maintain stability. 

“Businesses in the GCC need to brace themselves for a long-term effort by governments to close fiscal deficits and raise much more substantial revenues from the non-oil economy. In addition, they can expect the implementation of other offsetting populist policies like the drive to increase the national share of the workforce, especially in the private sector,” said Michael Armstrong, FCA and ICAEW Regional Director for the Middle East, Africa and South Asia (MEASA).

“To ensure that the adjustment in public finances is consistent with ongoing growth, businesses should make the case for accompanying measures that will allow tax increases to be absorbed with minimal impact on activity. Offsetting measures
could include welfare reforms to allow more citizens to compete for jobs with migrants, more flexibility to negotiate wages, and deductions from profit taxes to protect investment spending,” he added.