Bahrain is characterized by its diversified economic structure which is based on modern and integrated infrastructure and sophisticated legislation. It pursues economic freedom as a strategic option to encourage both domestic and foreign investments, and to strengthen its position as a distinguished financial and tourist hub in the Middle East. The Kingdom’s most prominent indicators are:
Bahrain’s economy is the most diversified amongst all regional Gulf countries. Non-oil sectors contribute to 79.2% of total GDP, which amounted to 29 billion U.S. dollars in 2013. The financial and banking sector is one of the most important non-oil sectors. Bahrain currently has 406 financial institutions which contribute to 16.7% of total GDP. In addition to that, Manufacturing industries contribute 14.5%, transport and communications contribute 6.8%, construction works contribute 6.6%, real estate contributes 4.1%, hotels and restaurants contribute 2.4% of total GDP. Other service industries contribute 18.7%. The contribution of the oil sector is 20.8% of total GDP. Bahrain’s annual economic growth is 5% on average.
According to the Index of Economic Freedom issued by the Heritage Foundation of America during the years (1995-2014), Bahrain ranked in the first position both regionally and in the Arab world. Last year, it also ranked in the 13th position globally. Bahrain offers legislative incentives and many advantages and facilities for foreign companies, including the complete ownership of companies and the establishment of branches without the need for a local agent as well as freedom and stability of fiscal and monetary policies.
According to the survey Expat Explorer HSBC for the year 2012, Bahrain ranked the first among Arab countries and the tenth globally as a favorite place for expatriates to work and live in.
According to Doing Business Report issued by the World Bank in 2013, Bahrain is the 4th in the Arab World and the 42nd globally; and the 1st in the Arab world and 7th in the world in the ease of issuance of building permits.
In the Logistics Performance Index issued by the World Bank in 2010, Bahrain ranked 32nd globally. Bahrain was also awarded Free Zone Auhority Award and Logistics Award during the event of SeaTrade ME & Indian Subcontinent Awards 2011, due to the presence of Bahrain Logistics Zone next to Khalifa Bin Salman Port (KBSP), Bahrain International Airport, Salman Industrial City, an integrated transportation network, a modern infrastructure as well as services to facilitate customs clearance.
Bahrain is the headquarters of MENAinc Middle East and North Africa Business Incubation Network which is part of the global network of infoDev (World Bank). Since 2004, Bahrain has also been the regional headquarters of the Middle East & North Africa Financial Action Task Force (MENAFATF) against money laundering as well as the Regional Centre for Information and Communication Technology (CICT).
According to the Arab Knowledge Economy Report 2014 issued by the Madar Research and Development in collaboration with the Orient Planet, Bahrain has ranked first among Arab countries in ICT-use Index. Based on six key indicators, Bahrain is the first among Arab countries in the use of the Internet. It has mobile telephone subscriptions with a penetration rate of 173%, a wide range of broadband subscriptions of 128% and fixed-line penetration of 20%. The Telecommunications sector contributes to 4% of total GDP.
Bahrain has well-balanced international economic and trade relations. In 2013, its estimated value of total exports was approximately 20.9 billion U.S. dollars, of which oil was 73%, while the total value of its imports was 13.6 billion dollars. This resulted in Bahrain having surplus in its trade budget amounting to 7.3 billion dollars. Bahrain has very close economic ties with the Gulf Cooperation Council (GCC) since the establishment of the free trade zone 1983, the Customs Union in 2003, the Gulf Common Market in 2008, the Monetary Union Convention and the formation of the Monetary Council in 2010. Bahrain plays an important role towards the creation of the Gulf Union. Bahrain is also member of the Greater Arab Free Trade. It signed a free trade agreement with the United States, the first of its kind in the Gulf region and the third in the Arab world since it entered into effect in August 2006.