Kuwaiti Economic Report Expects 2022 Bahrain Budget to Record First Surplus in 14 Years

2022-05-09 - 3:33 am

Bahrain Mirror: Bahrain's 2022 budget will record a surplus for the first time in 14 years, supported by the increasing crude oil prices, a Kuwaiti economic report predicted Sunday.

The report issued by the National Bank of Kuwait on Bahrain's economy said "The increase in oil production and prices will boost Bahrain's economic growth rate to 3% in 2022, surpassing the GDP growth rate (2.2%) recorded in Bahrain before the Coronavirus pandemic."

It added "The budget is moving towards a surplus this year, exceeding the goal of achieving balance by 2024."

However, it noted that the continued high levels of government debt remains a major concern, as well as the possibility of a decline in oil prices.

Although Bahrain is considered one of the most diversified economies in the Gulf region, it will benefit more than other states from rising oil revenues due to the weaknesses in public finances. 

The growth of the non-oil economy is expected to reach 3% in 2022, thanks to the lifting of Coronavirus restrictions, according to the same report.

The tourism and hospitality sectors are to continue to recover, with benefiting from the financial sector, which is considered one of the main sectors (20% of non-oil GDP).

On April 21, Moody's, Global Credit Ratings, changed the outlook on Bahrain to stable from negative and has affirmed its B2 long-term 

The agency said in a statement that the change of outlook to stable reflects "an easing of downside risks to Bahrain's ratings."

It added "The increase in oil prices since early 2021 will remain elevated for the next few years, improving the outlook for the sovereign's fiscal and external balances, reducing the rate of government debt accumulation and lowering government liquidity and external vulnerability pressures."

Bahrain's economy has faced major challenges over the past years and this crisis exacerbated during the Coronavirus pandemic, but the $10 billion gulf support which Manama received in 2018 helped it face these pressures relatively. 

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