Country Report Bahrain April 2009

Summary

In 2009-10 the rule of the king, Hamad bin Isa al-Khalifa, is expected to remain broadly secure, with the Al Khalifa family retaining control over the executive branch of government and the legislature remaining weak.
There will be underlying tensions over economic inequalities, the halting pace of political liberalisation and perceptions of sectarian discrimination.
The main foreign policy concern will be Iran's (officially civilian) nuclear programme. Bahrain will seek to maintain cordial ties, but relations will be strained by concerns about Iranian respect for Bahrain's sovereignty.
We project that the central government budget deficit will be equivalent to 7.6% of GDP in 2009 and 4.9% of GDP in 2010.
The fall in oil prices will give more urgency to efforts to diversify revenue, possibly including the introduction of value-added tax (VAT).
Real GDP growth is forecast to slow to 2.4% in 2009, as regional and international demand for Bahrain's exports weakens, but will recover modestly to 3.1% in 2010.
Bahrain's current account is expected to be close to balance in 2009 and to record a modest surplus in 2010 as oil prices recover.

The king has pardoned 178 prisoners, including a number of Shia opposition activists who were awaiting trial on charges of promoting the overthrow of the government by force.
The leader of the main Shia political society, al-Wefaq, has welcomed the pardon and called for calm and national unityindirectly pleading for an end to the frequent riots seen in poorer villages and suburbs in recent weeks.
A Pakistani national has died after his car was attacked with a home-made explosive, according to officials from the Ministry of the Interior.
The 2009-10 budget has been passed after the government agreed to demands from the elected lower house of parliament to retain an inflation subsidy.
The Central Bank has announced plans to issue a three-year sovereign bond worth BD250m (US$665m) in late May as well as US$500m of sovereign sukuk (Islamic asset-based securities).
Growth in M3, a broad category of money supply, slowed to 17% in February, from 20.8% in the fourth quarter of 2008.
Private-sector wages increased by 13.8% year on year in the fourth quarter of 2008, having risen by 7.4% in the third quarter.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;15
NAICS Code: 72;23