(MENAFN - Arab News) The robust expansion of the Bahraini economy gathered further momentum this year with headline GDP growth now projected close to 5 percent.
The expansion this year has been above all driven by substantial gains in the oil and gas sector where output levels rebounded to capacity after technical disruptions in 2013.
At the same time, key drivers in the nonoil sector are strengthening and will make an increased contribution to the continued expansion of Bahrain's economy in 2014, according to the latest Bahrain Economic Quarterly (BEQ), issued by the Bahrain Economic Development Board (EDB).
The report notes that growth in the second half of this year has benefited from a tentative improvement in the global economic situation leading to cautious optimism about the wider outlook.
Renewed momentum in key emerging markets is creating opportunities for Bahraini trade while the strengthening performance of the regional economies has further contributed to real GDP growth of around five percent in 2013.
The adoption of the budget half way through the year has lent a significant stimulus to economic activity, and the annual pace of nonoil growth picked up markedly from 2.5 percent in Q2, 2013 to 3 percent in Q3, 2013.
Overall growth is set to stabilize to around four percent in 2014, but the contribution of the nonoil sector is set to increase significantly due to the prospect of a large increase in project spending.
A number of significant undertakings, whether funded locally or from the GCC Development Fund, are either starting or about to be launched. This move should in turn have significant positive implications for activity in a number of other sectors, for business and consumer confidence, and for bank credit growth.
Some important longer-term projects for the oil and gas sector are also moving forward, including consultancy work for the planned offshore LNG import terminal, which is expected to be operational in 2016, the modernization and expansion of the Sitrah refinery is due to be completed in 2017, capacity of the oil pipeline from Saudi Arabia is being expanded by over fifty per cent, and exploratory deep gas wells are due to be drilled next year.
Analysis in the report demonstrates that the situation in the labor market has continued to undergo a gradual improvement with total private sector employment growth in Q2, 2013 of 6.2 percent. This is in large part reflective of the rebound in a number of labor-intensive sectors, such as hotels and restaurants as well as construction.
Kamal bin Ahmed, minister of transportation and acting chief executive of Bahrain EDB, said: "Bahrain's economy continued to outpace average global growth in 2013 thanks to the solid economic fundamentals. The anticipated greater contribution from the nonoil sector in 2014 reflects the continued focus on diversifying the Kingdom's economy, and the investment in key infrastructure projects will also further strengthen Bahrain's position as the gateway to the 1.5 trillion Gulf market."