Desperate for the F1 as Bahrain’s Economy Tanks

Bahrain economy slows to 1.3% growth
By Reuters – 21 March, 2012

Bahrain’s economic growth slowed in the final three months of 2011, a sign that political unrest is continuing to weigh on businesses after an uprising against the government was crushed early last year.

Inflation-adjusted expansion in gross domestic product deccelerated to 1.3 percent quarter-on-quarter from 2.2 percent in the third quarter of 2011, the statistics office said on Wednesday. On an annual basis, GDP expanded 3.2 percent in the fourth quarter after a 2.9 percent rise in July-September.

Overall, economic growth in the small non-OPEC oil exporter roughly halved to 2.2 percent last year, the worst performance since a 0.3 percent contraction in 1994, when oil prices fell to US$13 per barrel. They are currently above US$120.

“Given the high oil prices last year, for an oil producer a 2 percent growth is not particularly impressive,” said Gabriel Sterne, a senior economist at Exotix in London.
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“That is mainly due to the political tensions that we have seen. Nothing was really resolved to the satisfaction of all parties.”

The Sunni-controlled island kingdom, a Gulf financial hub, was hit hard in February and March by its worst sectarian unrest since the 1990s, which forced banks and shops to close and triggered an outflow of funds. Total investment parked in Bahrain’s mutual funds dropped by nearly US$800m last year to US$8.4bn, central bank data show.

Last year’s economic growth “is satisfactory in light of current economic challenges and the economic outlook in the near term looks positive”, Central Informatics Organisation president Mohammed al-Amer said as he announced the GDP data.

“Improving local and global indicators are also expected to result in economic stability (and) encourage local and foreign investors to reconsider shelved investment decisions. However, restoration of economic growth rates which were prevalent before the crisis will take some time,” he said.

Output growth in the hydrocarbon sector, which accounts for a third of Bahrain’s $26 billion economy, more than halved to 2.4 percent quarter-on-quarter during October-December, the data showed. …more