Manama’s bold move forward
By Theodore Karasik and Madison Taylor
The Kingdom of Bahrain has recently discovered massive amounts of hydrocarbon deposits that could produce 80 billion barrels of oil and roughly 10-20 trillion cubic feet of natural gas. The new discovery should help close the Kingdom’s budget deficit. After an earlier IMF warning about the dinar’s weakness against the dollar, the deposits have been discovered at an ideal time.
The massive amounts should provide significant medium-run support as the Kingdom prepares to diversify its economy and move away from oil in the long-run.
In terms of growth, Bahrain has had a successful quarter for FY18. Non-oil economic growth has increased five percent, topping all other countries in the GCC. Trailing Bahrain’s growth is Kuwait at 4.6 percent and Qatar at 4.2 percent. Behind them, the UAE sits at 2.9 percent, Oman at 2.5 percent, and Saudi Arabia at 1.3 percent.
What has made Bahrain particularly successful with non-oil growth? Contributing factors from 2017, leading into 2018, include trade, social services, real estate, and government spending. These factors demonstrate a significant commitment to the Kingdom’s Vision 2030 and economic diversification. With these developments, Bahrain is showing its potential as a major player and leader in the region.
To continue economic diversification, the Kingdom of Bahrain seems to be focused primarily on investment. Similar to goals in Saudi Arabia and the UAE, Manama hopes to become a center of innovation. The recently concluded “Gateway Gulf” event featured a multitude of investment opportunities. Speakers for the event included executives from NEOM, Amazon Web Services, Boeing, Inventis Investment Holdings, J.P. Morgan, and analysts from CNNMoney and CNBC.
With high-profile speakers and analysts, the Kingdom of Bahrain hopes to attract enough investment to kick-start its Economic Vision 2030. One highlight of the event was discussion of China’s “Belt and Road Initiative,” a mega-project beneficial to East Asia, Europe, and East Africa. China is prepared to heavily invest in foreign countries and Bahrain already has necessary infrastructure for this development.
Other signs of growth include the Economic Development Board’s (EDB) commitment to closely analyzing trends in potential investment and publishing reports every quarter for investors and analysts alike. The EDB also runs the “Startup Bahrain” campaign that focuses on foreign startup investment and experimentation.
The campaign provides resources to entrepreneurs, investors, institutions, and the Bahrain Government to cultivate startup culture within the Kingdom. The campaign boasts several advantages over other markets, including flexible visa policies, competitive business costs, no taxes, access to a highly educated and qualified talent pool, and access to a multitude of investors. These advantages are likely to be implemented sooner rather than later.
Another promising prospect is the growth of Bahrain’s Gulf Air. The airline is looking to bolster Middle Eastern routes to improve revenue. With a fleet expansion from 28 to 35 and passenger growth forecasts from 5.3 to 5.5 million, Gulf Air is off to a good start. In addition, the airline could have the perfect opportunity this year to pick up routes that Qatar Airways can no longer cover because of the ongoing boycott.
Thanks to Gateway Gulf and the on-going campaign of Startup Bahrain, the Kingdom of Bahrain has the potential to effectively navigate away from oil-based revenue. Successful investments in technology and finance could lead to a boost in the country’s market for tourism and create competitive jobs for international talent prospects.
With clear interest from high-profile actors even in the early phases of Bahrain Vision 2030, the Kingdom’s focus on investment, if implemented properly will carry the country to new economic prosperity and diversification. Even more so, Bahrain has shown its potential to become an active leader of innovation and development.
Bahrain is seeking to upstage its Arab neighbors in terms of investment opportunity and the ability to stand freely outside the wreckage of the former Gulf Cooperation Council as we knew it. With the discovery of huge estimated reserves from the offshore Khaleej Al Bahrain field, Bahrain is hoping to be able to stand on its own right outside the shadow of its Arabian Peninsula neighbors.
With the IMF calling Bahrain’s economy the fastest growing the region, Manama’s position looks very good as its neighbors undergo their respective economic transformations. The competition will be stiff as Gulf neighbors revise their residency laws and their business ownership regulations.