Economy of Bahrain

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According to the 2009 Index of Economic Freedom published by the Heritage Foundation and the Wall Street Journal, Bahrain has the freest economy in the Middle East and North Africa region [1] and is thirty-ninth overall in the world. An alternative index, published by the Fraser Institute, puts Bahrain in 44th place tied with 7 other countries.

Contents

Macro-economic trend

This is a chart of trend of gross domestic product of Bahrain at market prices estimated by the International Monetary Fund with figures in millions of Bahraini Dinars.

For purchasing power parity comparisons, the US Dollar is exchanged at 0.30 Bahraini Dinars only. Mean wages were $19.81 per manhour in 2009.

Balance of Payments

Bahrain's current account balance is characterized by surpluses in merchandise trade and international services, and a large deficit in unilateral transfers, which is accounted for by the country's large expatriate workforce sending home a portion of its earnings. In 2003 and 2004, the balance of payments performance improved due to rising oil prices and increased receipts from the services sector. As a result, the current account balance registered a surplus of US$219 million in 2003 and a surplus of US$442 million in 2004, compared with a deficit of US$35 million in 2002. Bahrain's gross international reserves increased substantially in 2004 to US$1.6 billion, compared with US$1.4 billion in the previous three years (2001–2003).

Diversification

Though Current GDP per capita shrank by 2.4% in the Eighties, it bounced back to a growth of 36% in the Nineties as a result of successful diversification initiatives. Bahrain's urgency in embracing economic liberalisation is due to its need to diversify the economy away from its limited oil supplies. Unlike it Persian Gulf neighbours, Bahrain has little oil wealth and the economy has expanded into banking, heavy industries, retail and tourism. The Kingdom is the main banking hub for the Persian Gulf and a centre for Islamic finance, which has been attracted by the strong regulatory framework for the industry. According to the International Monetary Fund's Financial System Stability Assessment of Bahrain's financial regulartory environment, published on 6 March 2006, found:

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