Business Monitor International


Bahrain Business Forecast Report

Published 26 August 2014

  • 53 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
 
$1,195.00
Bahrain Business Forecast Report

Core Views

  • In light of record oil revenues and the weakness of private investment, we expect public spending to outperform over the coming quarters, which should support activity in the non-hydrocarbon economy. Efforts to address the shortage of affordable housing will see government CAPEX accelerate.

  • We do not believe that weaker oil prices will derail the Bahraini government's investment plans, ensuring a continued source of support for the country's economy. Real GDP growth will reach 3.8% in 2015 and 2016, compared to an annual average of 3.6% between 2009 and 2013.

  • Bahrain's reputation as a stable and welcoming location to do business in the Gulf has suffered as a result of the volatile political climate. At the moment, it remains to be seen if Manama will be able to compete with Doha and Dubai in attracting investment into the all-important hospitality and financial services industry.

  • The economy's medium-term outlook remains contingent upon a lasting solution being found to the current political crisis. Unfortunately, we maintain our relatively guarded outlook on the prospects that the government and opposition can come to some form of agreement in the near term.

  • Bahrain's weak medium-term fiscal prospects will force the government to make difficult choices. We believe that Manama will have little option but to introduce new taxes over the coming years, while the issue of spending consolidation will loom large on the agenda. Support from Saudi Arabia could delay these pressures, but would entail a significant loss of sovereignty.

Key Risks To Outlook

  • A more pronounced regional crisis stemming from an uptick in tensions between Iran and the West could see risk premiums spike higher, particularly for Bahrain.

  • A marked drop in oil prices concomitant with a slowdown in growth in Europe, the US and China would pose a significant risk to the country's near-term growth outlook, and likely lead to a marked deterioration to the country's balance...

Table of Contents

Executive Summary
5
Core Views
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Ratings
7
Domestic Politics
8
Status Quo To Continue, Limiting Reform
8
Table: POLITICAL OVERVIEW
8
Long-Term Political Outlook
9
Sun, Sea, And Sectarianism: Prospects For Future Stability Assessed
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Ratings
13
Economic Activity
14
Growth Reliant On Public Investment
14
Table: Economic Activity
14
Economic Policy
17
Wave Of Consolidation Beginning
17
Banking Sector
19
Better Lending Opportunities Over 2014
19
Tab le: Banks ' Net Profit (USD)
19
Regional: Islamic Banking
20
Growth To Slow, But New Markets To Surface
20
Tab le: GCC Islamic Bonds (2014)
21
Chapter 3: 10-Year Forecast
25
The Bahrain Economy To 2023
25
Political Crisis Raises Risks
25
Table: Long-Term Macroeconomic Forecasts
25
Chapter 4: Business Environment
27
SWOT Analysis
27
BMI Business Environment Risk Ratings
27
Business Environment Outlook
28
Institutions
28
TABLE : BMI BUSINE SS AND OPER ATION RISK RATINGS
28
Infrastructure
29
TABLE : BMI LE GAL FRAMEWOR K RATING
29
Market Orientation
30
TABLE: LABOUR FORCE QUALITY
30
TABLE: MENA - ANNUAL FDI INFLOWS
31
TABLE: TRADE AND INVESTMENT RATINGS
32
Operational Risk
33
TABLE: Top Export Destinations, 2001-2009
33
Chapter 5: Key Sectors
35
Freight Transport
35
Tab le: Air Freig ht, 2011-2018 ('000 tonnes)
36
Tab le: Maritim e Freig ht - Throug hput , 2011-2018 ('000 tonnes)
36
Real Estate
38
Tab le: Offic e Forecast Net Yield, 2012-2018 (%)
39
Tab le: Retai l Forecast Rents , 2014 And 2015 (USD per m2/month)
39
Tab le: Forecast Offic e Rents , 2014-2015 (USD per m2/month)
39
Other Key Sectors
41
Tab le: Oi l and Gas Sect or Key Indicat ors
41
Tab le: Pharma Sect or Key Indicat ors
41
Tab le: Aut os Sect or Key Indicat ors
41
Tab le: Telecoms Sect or Key Indicat ors
42
Tab le: Infrast ructu re Sect or Key Indicat ors
42
Tab le: Food and Drink Sect or Key Indicat ors
42
Chapter 6: BMI Global Assumptions
43
Global Outlook
43
Growth Increasingly Polarised
43
Table: Global Assumptions
43
Table: Developed States, Real GDP GrowtH, %
44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
44
Tab le: Em ergi ng Markets , Real GDP Growt h, %
45

The Bahrain Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Bahrain and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Bahrain's economic, political and financial prospects through end-2018, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Bahrain's economic and industry growth through end-2018.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Bahrain's country risks against regional peers using BMI's country comparative Risk Rankings system.
  • Evaluate external threats to doing business in Bahrain, including currency volatility, the commodity price boom and protectionist policies.

The Bahrain Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Bahrain economic policy-making and performance impact on corporate profitability over 2014-2018?

BMI provides our fully independent 5-year forecasts for Bahrain through end-2018 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Bahrain Business Forecast Report features BMI's forecasts with supporting analysis for 2014 through to end-2018, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2018 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Bahrain and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Bahrain, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Bahrain over the next 5-years?

BMI's Bahrain country Risk Rankings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Bahrain Market - Political Strengths, Weaknesses, Opportunities and Threats facing Bahrain.
  • Political Stability and Risk Assessment - BMI's Risk Rankings assess explicit short- and long-term risks to political stability; latest ankings, rankings and trends for Bahrain's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Bahrain's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Rankings with SWOT Analysis - Business Environment Risk Rankings for Bahrain, benchmarked against rankings for regional neighbours.

Country Competitiveness - Competitiveness of Bahrain's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Rankings.

Key Sector Outlook

Which industry sectors in Bahrain will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Bahrain's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2009-2013, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2014-2018, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express