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Bahrain Recovering From the Financial Recession

Middle East : 20 July 2010

The Economic Development Board (EDB) of Bahrain has announced that economic growth in the country will be higher this year than it was last year. Great news for anyone looking for employment opportunities in Bahrain. It has also acknowledged, by implication, that the financial sector has been badly hit by the world economic recession.

In a statement, the EDB said that Bahrain’s gross domestic product (GDP) was likely to increase by more than 4%, compared to last year’s growth of 3.2%. The central bank has also made the same predictions.

The EDB also stated that there had been a more noticeable growth of 5.2% in the first quarter of this year, with only 1.4% growth in the fourth quarter of 2009.

The EDB is a government agency that sets economic policies in Bahrain, and it has not often acknowledged the problems affecting financial investment and related issues in the country during the past couple of years. In its most recent statement, the board said that the financial sector would recover slowly as investors were still reeling from the “regional property crash” that occurred towards the end of 2008.

It said, the expected economic growth would be driven and ultimately determined by “household consumption”.

Ithmaar and Arcapita were just two of the companies that were badly affected by the crash which was followed by a freeze in the local investment market. Both companies had been reliant on the ability to raise funds that were needed for property and other private investment and equity ventures.

Bahrain is known to be an “off-shore financial hub” in the United Arab Emirates, particularly for the wealth that has been accumulated from oil in both Kuwait and Saudi Arabia. About a quarter of the GDP in Bahrain comes from what the EDB calls “financial industry accounts”.

It is largely the burden of this offshore development of property in Bahrain’s “wholesale banking sector” that weighs most heavily on the financial sector, the statement said.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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