IMF: Bahrain’s economy to grow to 3.5% in ’25
Bahrain’s economic growth is forecast to remain at 3 per cent in 2024 and to rise to 3.5 per cent in 2025, driven by refinery upgrades and increased private investment, according to an International Monetary Fund (IMF) mission statement on Wednesday.
CPI inflation is projected to rise to 1.2 percent in 2024, before steadily converging to 2 percent over the medium term, the IMF added.
Over the medium term, growth is expected to stabilise at 3 per cent annually, with nonhydrocarbon sectors making up 90 per cent of the economy by 2029. However, the IMF report also warned of rising government debt, now at 123 per cent of GDP, urging further fiscal reforms.
The mission, led by John Bluedorn, highlighted Bahrain’s resilient economic performance in 2023, but noted the fiscal deficit had widened to –8.5 per cent of GDP, while inflation is projected to increase to 1.2 per cent in 2024. The IMF recommended a multi-year fiscal consolidation plan and further economic diversification efforts.
“The Central Bank of Bahrain should continue to closely follow the US Federal Reserve in changes to its policy stance. Looking forward, the anticipated easing of monetary conditions will mitigate the growth impact from fiscal adjustment, which in turn further supports the build-up of external buffers. Formalising and implementing a bank resolution framework would build on a tradition of sound financial sector supervision and regulation and help safeguard financial stability.” Bluedorn noted.
“Further developing the local currency bond market and the non-bank financial sector, while closely monitoring interconnectedness between banks and non-banks, would promote greater financial market deepening and the diversification of financing sources for the broader economy.”
Bahrain’s commitment to transparency, through the implementation of the National Summary Data Page, was also praised. The IMF’s final report will be reviewed by its Executive Board in November.
Attribution: IMF
Subediting: Y.Yasser
