Country Report Bahrain July 2009

Outlook for 2009-10

• 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, although Bahrain will seek to maintain cordial ties with Iran.
• The central government budget is forecast to record deficits of 0.8% of GDP in 2009 and 1.3% of GDP in 2010 as lower oil prices constrain revenue.
• The fall in oil prices will give more urgency to efforts to diversify revenue, possibly including the introduction of value-added tax (VAT).
• Bahrain will continue to take part in efforts to create a Gulf monetary union, despite the UAE's decision to pull out of the project. Progress may be slow.
• Real GDP growth is forecast to slow to 3.1% in 2009, as international demand for Bahrain's exports weakens, but to recover modestly to 3.3% in 2010.
• Bahrain's current account is expected to record surpluses of 8.4% of GDP in 2009 and 9.4% of GDP in 2010, based on our oil price assumptions.

Monthly review

• Bahrain's oldest newspaper, Akhbar al-Khaleej, has been suspended for a day for violating the press law, most likely over an article that was highly critical of Iran, its president and its religious leadership.
• Bahrain has congratulated the Iranian president, Mahmoud Ahmadinejad, on his (controversial) re-election on June 12th.
• Bahrain has became the fifth Gulf Arab country to sign a Memorandum of Understanding on labour issues with India.
• The government's labour fund, Tamkeen, has launched three initiatives to help small and medium-sized businesses with a variety of subsidies.
• A new joint venture to provide affordable housing, Naseej, has been launched with backing from the state pension fund.
• The spokesman of the General Federation of Bahrain Trade Unions (GFBTU) has estimated that 3,000 jobs have been lost in Bahrain since the beginning of the global economic slowdown, well above official estimates.
• Lending to the business sector has stagnated: it was up by 37% year on year in the first quarter, but was virtually unchanged in month-on-month terms.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;60;48;49;2834;80;47;1;15;10;70
NAICS Code: 336;52;517;22;3254;62;48;11;23;212;72