DUBAI: Bahrain’s economic growth slowed sharply in the final quarter of 2012 as growth in hydrocarbon output stalled and two years of social unrest weighed on the banking sector.
The economy grew 3.4 percent in full-year 2012, government figures showed, compared to a median forecast of 3.5 percent in a Reuters poll and up from 1.9 percent in 2011 when the government crushed pro-democracy protests.
The country has reported a decline in crude output from its key Abu Safa field shared with Saudi Arabia, which accounts for around 70 percent of budget revenue. Output in the hydrocarbon sector, which accounts for a quarter of Bahrain’s $30bn economy, grew by a mere 0.4 percent in October-December from the previous quarter and plunged nearly 8 percent on an annual basis.
Growth of Bahrain’s gross domestic product, adjusted for inflation, slowed to 0.5 percent quarter-on-quarter in October-December from a revised 2.8 percent in the third quarter. On an annual basis, the growth rate decelerated to 2.7 percent from 3.3 percent, the data showed.
The country of 1.3 million people has based its economic strategy on becoming a regional financial hub as it lacks the petrodollar wealth of its Gulf Arab neighbours.
The plan was dealt a blow from the political violence of 2011, in which the island’s Sunni Muslim rulers crushed protests led by the Shia majority. Lingering unrest continues to knock confidence in Bahrain’s economy and growth of the financial industry, which makes up around 16 percent of GDP, slowed in the final quarter of 2012. Reuters
