Reuters/Dubai
Bahrain’s economic growth slowed sharply in the final quarter of 2012 as growth in hydrocarbon output stalled and two years of social unrest weighed on the banking sector.
The economy grew 3.4% in full-year 2012, government figures showed, compared to a median forecast of 3.5% in a Reuters poll and up from 1.9% in 2011.
The small non-Opec oil exporter has reported a decline in crude output from its key Abu Safa field shared with Saudi Arabia, which accounts for around 70% of budget revenue.
Output in the hydrocarbon sector, which accounts for a quarter of Bahrain’s $30bn economy, grew by a mere 0.4% in October-December from the previous quarter and plunged nearly 8% on an annual basis.
Growth of Bahrain’s gross domestic product, adjusted for inflation, slowed to 0.5% quarter-on-quarter in October-December from a revised 2.8% in the third quarter. On an annual basis, the growth rate decelerated to 2.7% from 3.3%, the data showed. The country of 1.3mn people has based its economic strategy on becoming a regional financial hub as it lacks the petrodollar wealth of its Gulf Arab neighbours.
The plan was dealt a blow from the political violence of 2011. Lingering unrest continues to knock confidence in Bahrain’s economy and growth of the financial industry, which makes up around 16% of GDP, slowed in the final quarter of 2012.
Last month, the central bank governor forecast 2013 economic growth of around 4%, much less than the 6.2% the government’s Economic Development Board predicted in February.
That is still more optimistic than the latest Reuters survey in which analysts trimmed their 2013 growth forecast to 3.2% from 3.5% seen in September, partly due to the ongoing unrest.
Bahrain is the only GCC member facing a fiscal deficit this year.