Bahrain 'major hub for foreign investment'

There are strong signs of confidence in the Bahrain economy with the kingdom remaining a good place for foreign investment.

Standard Chartered Middle East and North Africa senior economist Philippe Dauba-Pantanacce said both Bahrain and the GCC were in a strong position at the moment for a number of factors but Bahrain could face a longer term weakness if it cannot secure oil and gas supplies.

'About 80 per cent of Bahrain's exports are oil, with pretty well the rest being aluminium,' he said.

'The oil price is 60 per cent up on where it was a year ago while aluminium is up 25 per cent.

'The country has improved its public finances and has a current account surplus of 10 per cent.

'The weak euro means that imports are less expensive and that reduces any problems with inflation.'

He said that the US decision to double the size of the naval base would not only provide work for local businesses but would bring more consumers into the country.

'This expansion means that Bahrain is seen as the centre for US strategy in the Middle East and that is important for the future,' he said.

'The government's $1.25 billion bond issue was received positively in international markets and that shows Bahrain is still a good place for foreign investment,' he said.

On the downside, he said Bahrain had to secure supplies of oil and gas and complete negotiations with either Qatar or Iran for gas.

He also said that the real estate sector across the region, with the possible exception of Saudi Arabia, was likely to stagnate for some time.

On the global outlook he said he saw recovery in the US and Europe as fragile while in the east, particularly in China and India there was a strong recovery.

'China has increased exports by 50 per cent and imports by 40 per cent and India has also been producing good figures,' he said.

'India is impressive and has long-term strengths in that its growth is not so much export-led but relies more on the middle class for its growth.

'The Middle East is between East and West, both geographically and economically and at the moment that is a good place to be,' he added.-TradeArabia News Service