Country Report Bahrain November 2008

Outlook for 2009-10

• The rule of the king, Hamad bin Isa al-Khalifa, is expected to remain broadly stable, but discontent over the pace of political liberalisation and the persistence of economic inequalities will result in frequent protests and riots.
• In an effort to limit support for hardline opposition groups, the government will boost spending on programmes designed to improve living standards. The government budget is expected to record small deficits.
• Policymaking will be complicated by divisions within the ruling family over the pace of economic liberalisation and the best way to deal with dissent.
• Iran's nuclear programme will remain Bahrain's chief foreign policy concern. Bahrain will remain closely allied with the US, and wary of Iran, but will seek to maintain outwardly cordial relations with the Islamic Republic.
• The state holding company, Mumtalakat, will gradually sell off its domestic assets and expand its overseas investments, behaving more like a sovereign wealth fund than a traditional state holding company.
• The Central Bank of Bahrain is expected to maintain the Bahraini dinar's peg to the US dollar at the current level in 2009-10, but will discuss a range of options for the planned Gulf Co-operation Council single currency.
• Real GDP growth is forecast to slow to 3.4% in 2009 as regional and international demand for Bahrain's exports of goods and services weakens, and as financing conditions tighten. It is likely to rise modestly to 4.3% in 2010.

Monthly review

• At a briefing to members of the US Congress on October 15th, Bahraini human rights and opposition activists made detailed allegations about discrimination by the Sunni-dominated government against the country's Shia majority.
• The government has invited representatives from the UN Human Rights Council, Human Rights Watch and Amnesty International to Manama for a conference in late November to discuss its action plan on human rights.
• The cabinet has approved the draft budget for 2009-10, which envisages rising spending on housing, education, and health services, but considerably lower capital spending than in 2007-08. Parliament has yet to approve it.
• The king has launched a long-term economic strategy to guide Bahrain's economic development through to 2030. It focuses on the need to develop jobs for nationals and to reduce the budget's dependence on oil revenue.
• The Central Bank has cut its deposit rates for the second time since early October, as well as reducing its repo rate from 4.75% to 3%, in order to allay concerns about regional liquidity and to respond to US rate cuts.

Source: Country Report

This report covers the following industry codes:
SIC Code: 13;49;60;47
NAICS Code: 211;22;52;48