COUNTRY OUTLINE
The Kingdom of Bahrain (formerly an Emirate) became a constitutional monarchy in February 2002 and it has been ruled by King Hamad bin Isa al Khalifa since 1999.
The population consists of around 700,000 people (according to the last census, which was taken in 2004) around 400.000 are Bahrainis and the rest are work expatriates mainly from the South and the South-East of Asia. Around one third of the Bahraini population is Sunni while approximately two thirds are Shiite; this composition of the population makes the Country subject to the influence of its two neighbours: Saudi Arabia (Sunni) and Iran (Shiite).
Since its independence (1971), Bahrain has always kept a pro-western attitude, especially towards the USA and the UK. The Fifth Fleet of U. S. Navy is based on the island. In the past, thanks to its geographical position, the Kingdom of Bahrain was a main commercial hub for the Gulf’s economy and for the commercial exchanges between Europe and Asia. This favourable location helped the development of fishery and of the pearls industry.
The oilfields (the first were discovered in 1932) are scarce and for this reason the Kingdom diversified its economy considering as fundamental the services sector (particularly banking and tourism); other sectors promoted by this process of diversification are oil refining and aluminium production. In addiction, the Bahraini Government is carrying out a privatization and liberalization of the economy, starting from the telecommunications sector.
In May 2004 the Kingdom of Bahrain signed the Free Trade Agreement with the USA which caused some tension with Saudi Arabia, which believed the agreement was in contrast with the Gulf Cooperation Council’s interest; the dispute was then solved because it became clear that, as per the current situation, it is not possible to make a single agreement between the GCC as whole and the USA.
ECONOMIC TREND
The currency of the country is the Bahraini Dinar (BHD), which is pegged to the US Dollar at an exchange rate of 1BHD = 0.376 US$.
The institution which defines economic and investment development strategies in Bahrain is the Economic Development Board (EDB), which has indicated as fundamental for the Country’s growth the following sectors:
- financial services;
- tourism;
- computer sciences;
- healthcare, education and training;
- aluminium industry.
In 2006 the GDP increased by 7.8% (as in 2005). The Economist Intelligence Unit estimates that in 2007 the increase will be around 6.7%, while in 2008 it should be around 6.0%.
74% of the total income of the State is generated by the oil industry, but the same industry contributes only by a 25.2% to the GDP. This figure confirms the effort of the Government to diversify the economy. In effect more than the 40% of the GDP is represented by the service sector (financial sector and real estate: 32.4%; trade, hotels and restaurants: 12.1%); manufacturing industries account for the 13.0% of Gross Domestic Product, Public Administration for 12.5% and transports and telecommunications for 6.2%.
One of the main problems of the Kingdom of Bahrain is unemployment and its rate is, according to official statistics, around 3.8%. A realistic estimation though suggests a rate of about 16%. The 2007 inflation rate is expected to be around 3% (higher compared to the 2006 rate of 2.1% and the 2.6% rate of 2005) even if some private economists’ projections expect the rate to be superior.
The development of the private sector has been helped by a boost from the public sector to investments through the promotion of huge projects such as:
- several tourist, residential and commercial complexes;
- the construction of a new port at a cost of 1 billion dollars;
- the expansion of ALBA (Aluminium Bahrain) with a new production unit with a value of 1.7 billion dollars;
- the expansion of Manama airport;
- the realisation of the Financial Harbour, the new financial centre of the Country, and of the World Trade Centre, a new office and retail space;
- the construction of the Formula 1 circuit and all the required services;
- a wide programme, still in progress, of public works to improve the road network infrastructures.
Link correlato (in inglese)
legals
|
credits | F.A.Q.