Bahrain’s Diversification Strategy Spurs Economic Growth

Bahrain’s economy has experienced substantial growth, quadrupling over the past 20 years to reach $43 billion, thanks to its strategic diversification efforts. Nada Al Saeed, Chief of Strategy at the Bahrain Economic Development Board (EDB), highlighted this success in a recent interview with Akhbar Al Khaleej.

By shifting focus from its traditional reliance on oil, Bahrain has significantly diversified its economic base. The contribution of the oil sector to the economy has decreased from 40% two decades ago to just 16.1% today, despite an increase in its absolute value. The financial services sector has emerged as the largest contributor, accounting for 17.8% of the GDP.

A key element of Bahrain’s strategy involves targeting foreign investments based on clear plans that prioritize the nature and sector of investments and their potential contribution to the economy. This approach has led to an unprecedented achievement: attracting $6.8 billion in foreign direct investments (FDI). These investments have been crucial in boosting economic growth, supporting GDP, and bringing in expertise, technical know-how, and advanced technologies. Additionally, they have created job opportunities for local talent and enhanced international trade.

Bahrain’s success in attracting FDI can be attributed to several factors, including a sound regulatory environment, market openness, a strong local economy, the availability of local skills and up-to-date technologies, robust infrastructure, and competitive operating costs. The competition among Gulf states to attract foreign investment is seen as a positive phenomenon that promotes the integration of Gulf economies.

Despite international economic challenges and geopolitical shifts, Bahrain and the Gulf region have successfully attracted substantial international investments, further bolstering their economic resilience and growth prospects.