Bahrain is Heavily Dependent on Its Hydrocarbons Industry

Date: 2015-09-10

“• Bahrain, a middle-income economy, is heavily dependent on its hydrocarbons industry. Oil and natural gas are the major growth drivers, accounting for 21.0% of GDP and 88.0% of budget revenues in 2013. The government has actively pursued a policy of diversification, and has imposed restrictions on imports and the involvement of foreign enterprises with the aim of reducing its dependence on oil. The Economic Vision 2030 is being implemented to encourage investments in non-oil and gas industrial activities to bolster the private sector, attract foreign investment and provide adequate employment opportunities for the country’s younger population. Efforts to diversify the economy will create opportunities for the construction industry over the forecast period.

• According to the Bahrain Economic Development Board (EDB), in 2014 the government announced its plans to invest BHD8.3 billion (US$22.0 billion) in various infrastructure development projects by 2018. Projects include the renovation of Bahrain International Airport, the extension of the Aluminum Bahrain (ALBA) smelter, the development of Al-Jazair Beach, investment projects in Durrat Al-Bahrain and Bahrain Petroleum Company’s modernization project. These projects will support long-term economic growth, increase the country’s regional competitiveness and create jobs.

• Housing supply in Bahrain is relatively low compared to demand, which provides opportunities for residential developers. To meet demand from the country’s lower- and middle-income groups, the Ministry of Housing (MOH) entered into several public private partnerships (PPPs) to develop affordable housing across the country. In a bid to ensure housing for all residents by 2016, the MOH plans to build 30,000 homes by introducing liberal real estate laws, relaxed financing conditions and exemption from tax. In March 2015, the Ministry announced the construction of an additional 77,000 housing units by 2020. Consequently, various affordable housing projects will support the growth of the residential construction market over the forecast period.

• As part of the Bahrain Economic Vision 2030, a number of projects and opportunities have been proposed, which will result in the establishment of a BHD1.9 billion (US$5.0 billion) rail network, the BHD1.9 billion (US$5.0 billion) Saudi-Bahrain causeway, the construction of 30,000 homes by 2016, a BHD1.7 billion (US$4.6 billion) airport expansion program, the undertaking of long-term healthcare projects and schemes until 2023 and real estate properties development projects. Efforts to diversify the economy will create opportunities for the construction industry over the forecast period.”

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