Country Forecast Bahrain October 2012 Updater

Country Forecast Bahrain October 2012 Updater

Overview

Bahrain was the Gulf Co-operation Council (GCC) country most affected by social unrest in 2011, and the Economist Intelligence Unit expects there to be simmering political discontent during the forecast period. The ruling Al Khalifa family will remain in power, but street protests and crackdowns by the security forces will continue. Hardliners in the government are in the ascendancy and will not lend any credibility to the government's efforts to extend a hand to the opposition. Some opposition groups will call for the downfall of the monarch. Iran's nuclear programme will be the dominant foreign policy risk. Bahrain hosts the US Navy's Fifth Fleet and could be targeted by Iran in the event of a military conflict over Iran's nuclear programme. We expect further integration between members of the GCC, following a pledge by wealthier members of the bloc to provide Bahrain and Oman with US$10bn each in aid over 10 years. Economic policy will focus on shoring up growth, diversifying the economy and restoring confidence in Bahrain. The government will raise public spending, as it boosts subsidies and expands capital projects. We forecast that economic growth will average 4.3% a year in 2013-17. We expect the current account to record surpluses throughout the forecast period as oil prices stay high and the services sector recovers.

Key changes from last month

Political outlook

We have made no changes to our political outlook.

Economic policy outlook

There have been no substantial changes to our economic policy outlook.

Economic forecast

The economic forecast is mostly unchanged. Having risen to an estimated 3.9% in 2012-although this in part reflects a helpful base effect in 2012-economic growth is expected to slow to 3.7% in 2013.

Please Note: Due to the Nature of This Report The Toc is Not Available