Country Report Bahrain March 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.
• Tensions are rising over economic inequalities, the halting pace of political liberalisation and the arrest of popular opposition activists accused of links to an alleged bomb plot. There is some risk of small-scale bomb or arson attacks.
• 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.
• The government's ability to increase spending and boost living standards in 2009-10 is likely to be severely constrained by lower oil prices.
• Real GDP growth is forecast to slow to 2.4% in 2009, as regional and international demand for Bahrain's exports weakens, and to remain subdued at 2.5% in 2010 as government consumption growth slows.
• Bahrain's current account is expected to dip into deficit in 2009, before returning to surplus in 2010.

Monthly review

• Talks with Iran on a possible natural gas deal have resumed, having been briefly suspended after a diplomatic spat.
• The commander of the US Navy's Fifth Fleet, which is based in Bahrain, has emphasised the long-term nature of the US naval presence in the Gulf.
• A court has begun to try 21 people accused of involvement in an alleged plot to disrupt the country's National Day with bomb attacks. The trial, which began on February 24th, has been suspended for one month.
• In an effort to address concerns about the scarcity of affordable housing, the government has said that it will issue bonds worth BD300m (US$798m) to finance new housing projects.
• Progress on already planned infrastructure projects has reportedly been delayed as, by mid-March, MPs had not yet passed the 2009-10 budget.
• Parliament has voted to extend the paid maternity leave entitlement for women working in the private sector to 60 days from 45 days.
• Output at Bahrain's only fully owned oilfield, the onshore Awali field, has fallen by 4% year on year, according to full-year 2008 data.
• The Labour Market Regulatory Authority has said that 158,528 people work in construction. This represents 45% of the expatriate private-sector workforce..

Source: Country Report