Country Report Bahrain September 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, although Bahrain will seek to maintain cordial ties with Iran.
The central government budget is forecast to record deficits of 0.3% of GDP in 2009 and 0.5% 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 2.9% in 2009, as international demand for Bahrain's exports weakens, but to recover modestly to 3.9% in 2010.
Bahrain's current account is expected to record surpluses of 8.9% of GDP in 2009 and 10.1% of GDP in 2010, based on our oil price assumptions.

An MP from the largest grouping in parliament, the mostly Shia al-Wefaq, has resigned over a dispute about the government's provision of social housing.
The cabinet has said that all Bahrainis who applied for government housing before 2002 should receive accommodation by 2011.
Special forces have closed down an opposition meeting celebrating an alternative "national day" on the 38th anniversary of independence.
Signs have emerged that municipal spending plans are being affected by the economic slowdown.
The public works minister has said that eight major road projects worth about BD400m (US$1.1bn) are being delayed owing to uncertainty about funding.
The telecommunications regulator has ordered Batelco, the dominant telecoms company, to allow competitors to access international phone lines.
Bahrain has reported its first deaths from swine flu.
Mortgage lending has slowed sharply in year-on-year terms.
The new chief executive of state-owned Gulf Air, Samer Majali, has begun a strategic review of the lossmaking carrier.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;70
NAICS Code: 52;72