Countries

Statistical Snapshot

An island country, Bahrain is the least populous country in the Gulf Cooperation Council (GCC), estimated at 1.7 million and growing at an average of 4 percent in the last decade.[1] Like all other GCC countries, Bahrain’s population is largely urbanized, with 89 percent of its population living in urban areas.[2] Highly reliant on foreign labor, which reached 594,944 workers by the end of the second quarter of 2019, accounting for 79.5 percent of the country's total employment.[3] Bahrain has a migrant population of about 51.5 percent.[4]

The 2019 Human Development Index (HDI) for Bahrain is 0.852, positioning it in the very high human development group – ranking 42nd out of 189 countries and territories. Bahrain’s HDI has increased by 13.8 percent since 1990, owing to the progress in its indicators. Between 1990 and 2019, Bahrain’s life expectancy at birth increased by 4.9 years, mean years of schooling increased by 3.5 years, expected years of schooling increased by 2.8 years, and Bahrain’s GNI per capita increase by about 4.1 percent.[5]

Education prospects in Bahrain are positive as reflected by different indicators. The adult literacy rate registered 97.46 percent, 98.03 percent gross enrolment ratio in primary schools, and a drop-out rate of less than 3 percent.[6] Similarly, Bahrain has achieved remarkable accomplishments in the health sector. With government health expenditure at 4 percent of GDP,[7] the kingdom is ranked second among the Arab countries in the Universal Health Coverage Index at 76.8 after Algeria.[8]

In 2019, Bahrain adopted the highest number of regulatory reforms (nine), becoming one of the top 10 improvers out of 190 economies, improving in almost every area measured by World Bank’s 2020 Doing Business report. Bahrain’s efforts focused primarily on protecting minority investors, enforcing contracts, strengthening access to credit, implementing digital taxes payment and smoothing resolving insolvency.[9]

A minor player in the oil market, Bahrain produced 15.5 million barrels of crude oil in 2019, the least among the GCC countries.[4] In April 2018, Bahrain announced a huge discovery of offshore oil and gas of up to 80 billion barrels of oil.[10] Despite attempts to diversify, oil and gas still constituted around 75.7 percent of total government revenues in 2018, and contributed to 20.3 percent of GDP in Q3 2020.[11]

With the plunge in international oil prices as of mid-2014, external and fiscal vulnerabilities have deepened in Bahrain. Despite an increase in real GDP growth rate in 2016 and 2017 at 3.2 and 3.9 percent, respectively, growth slowed down to 1.8 percent in 2018, mainly due to the contraction in the crude petroleum and natural gas sector, dropping to -1.3 percent, and slowdowns in real estate and business activities and hospitality sectors, which contracted by 0.6 and 1.1 percent. In 2019, hydrocarbon GDP growth returned to positive figure increasing by 2.2 percent, driven by slight incline in oil production, while non-oil GDP growth registered 1.7 percent down from 2.5 percent in 2018. As a result, real GDP growth rate remained flat at 1.8 percent.[11]

Despite the introduction of a 5 percent Value-added Tax (VAT) in January 2019, inflation has eased, at an average of 1 percent in 2019, reflecting weak domestic demand.[11] Bahrain’s cash balance has been in deficit since 2009, peaking at 18.4 percent of GDP in 2015, and decreasing to 12 percent of GDP in 2018. The fiscal deficit narrowed in 2019 to 10.6 percent of GDP,[12] mainly due to an increase in non-oil revenues by 63 percent and a decrease in government expenditures by 128 million Bahraini Dinar (BHD). This improvement in the fiscal balance followed the implementation of several reform measures announced by the authorities as part of the Fiscal Balance Program, launched in October 2018, and aiming to address the Kingdom’s fiscal challenges over the medium term. Reforms included the introduction of the VAT, a voluntary retirement scheme for public sector workers and a government wide spending review and dedicated spending efficiency taskforces.[11] Persistent large fiscal deficits have led to a significant increase in the government debt, which reached 103.3 percent in 2019, up from 21.3 percent of GDP in 2009.[12]

The current account deficit has narrowed to 2.06 percent of GDP in 2019, down from 6.5 percent in 2018, driven by non-oil trade dynamics and small outflows of remittances.[12] Bahrain’s economy remains highly dependent on trade, with trade-to-GDP ratio amounting to 151.4 percent in 2018,[13]  and with its main non-oil trading partners being China, Saudi Arabia, United Arab Emirates (UAE) and United States. Around half (47.3 percent) of Bahrain’s total non-oil exports are destined to four Arab countries, namely, Saudi Arabia (23.2 percent), UAE (11.8 percent), Oman (6.5 percent) and Egypt (5.8 percent).[11]

According to ILO estimates, the unemployment rate increased from 1.6 to 4.1 between 2019 and 2020. Women are disproportionately affected, with a 4.8 unemployment rate compared to 0.8 for men.[14]

The spread of COVID-19 coupled with the strict lockdown measures and the collapse in oil prices has placed significant strains on fiscal and external balances. Official data from the Ministry of Finance indicate that, GDP growth has contracted by 8.9 percent (YoY) in Q2 2020, mainly due to disruption in the non-oil economy which witnessed an 11.5 percent contraction. The Hotels & Restaurants and Transport & Communications sectors were the most affected sectors by the pandemic, with a decline in growth of 61.3 percent and 47.4 percent (YOY) respectively in Q2 2020. Real GDP is expected to decline by around 5.8 percent and to bounce back to 5 percent in 2021, supported by the rebound of the non-oil sector and infrastructure projects.  Bahrain announced a relief package worth 560 million BHD in March 2020, centered on income support, tax and utility bill exemptions, and increasing liquidity to support SMEs. The central bank’s macro measures included BHD 3.7 billion in loan facilities to accommodate the extension of new loans and deferred debt payments.[15] Despite ongoing fiscal measures to lower expenditure and improve the budget deficit, the country’s high dependency on oil and limited fiscal space will make the country more vulnerable to the volatility in oil prices. As such and according to IMF estimates, fiscal deficit is expected to widen to 13.1 percent of GDP, leading to a rapid rise in public debt estimated to reach 128.3 percent of GDP in 2020.[11] 

This overview was last updated in February 2021. Priority is given to the latest available official data published by national statistical offices and/or public institutions.
 

Sources:

[1] Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. 2019. World Population Prospects. [ONLINE] Available at: https://population.un.org/wpp/ [Accessed 23 February 2021].

[2] Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. 2018. World Urbanization Prospects. [ONLINE] Available at: https://population.un.org/wup/ [Accessed 23 February 2021].

[3] Labor Market Regulatory Authority. 2020. Labor Market Indicators. [ONLINE] Available at: http://lmra.bh/portal/en/page/show/223 [Accessed 23 February 2021].

[4] Information and e-Government Authority. 2020. Bahrain Open Data Portal. [ONLINE] Available at: https://www.data.gov.bh/ [Accessed 06 November 2020].

[5] United Nations Development Programme (UNDP). 2020. Human Development Report 2020. Country Profiles, Bahrain. [ONLINE] Available at: http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/BHR.pdf [Accessed 23 February 2021].

[6] United Nations Educational, Scientific and Cultural Organization (UNESCO). UIS database. 2020. [ONLINE] Available at: http://data.uis.unesco.org/ [Accessed 23 February 2021].

[7] World Health Organization. 2020. Global Health Expenditure Database. [ONLINE] Available at: https://apps.who.int/nha/database/Select/Indicators/en [Accessed 23 February 2021].

[8] World Health Organization. 2019. Universal health coverage report 2019. [ONLINE] Available at: https://www.who.int/docs/default-source/documents/2019-uhc-report.pdf [Accessed 23 February 2021].

[9] The World Bank. 2019. Doing Business 2020. [ONLINE] Available at: http://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-Business-Regulation-in-190-Economies.pdf [Accessed 23 February 2021].

[10] National Oil and Gas Authority. April 2018. 80 BILLION BARRELS OF ‘OIL IN PLACE’ IDENTIFIED IN BAHRAIN. [ONLINE] Available at: http://www.noga.gov.bh/noga/news.aspx?id=2213 [Accessed 23 February 2021].

[11] Kingdom of Bahrain Ministry of Finance and National Economy. December 2020. Bahrain Economic Report 2019. [ONLINE]Available at: https://www.mofne.gov.bh/EconomicData.aspx [Accessed 23 February 2021].

[12] IMF. October 2020.World Economic Outlook Database [ONLINE] Available at:  https://www.imf.org/external/pubs/ft/weo/2020/01/weodata/index.aspx [Accessed 23 February 2021].

[13] The World Bank. 2020. World Development Indicators. [ONLINE] Available at: https://databank.worldbank.org/data/source/world-development-indicators [Accessed 23 February 2021].

[14] International Labor Organization. 2021. ILOSTAT database [ONLINE] Available at: https://www.ilo.org/shinyapps/bulkexplorer47/?lang=en&segment=indicator&id=EAP_2WAP_SEX_AGE_RT_A [Accessed 8 April 2021].

[15] International Monetary Fund. 2021. Policy Responses to Covid-19 [ONLINE] Available at: https://www.InternationalMonetaryFund.org/en/Topics/InternationalMonetaryFund-and-covid19/Policy-Responses-to-COVID-19#B [Accessed 23 February 2021].