MANAMA – Bahrain's economy is seeing a revival with gross domestic product (GDP) posting strong growth this year, according to an international investment bank. Latest figures from Bank of America Merrill Lynch Global Research show Bahrain's GDP grew 2.4 percent in the first half of this year and is set to grow further up to 2.9 percent for the same period next year. Bahrain is entering a growth period following last year's disappointing economic indicators and is likely to receive a sovereign ratings boost soon, according to an economist. “Prior to 2011, Bahrain was close to 5 percent growth,” said Amin Al Arrayed. “Merrill Lynch is confirming the consensus that we're now entering the growth period.” The positive outlook from the investment bank will improve Bahrain's chances of an upgrade from credit ratings agencies, he added. “It will give comfort to ratings agencies that are looking for economies that will create jobs,” said Al Arrayed, general manager at real estate firm First Bahrain. “The positive GDP growth forecast will boost ratings for Bahrain at a sovereign level.” The country's GDP fell to 2.2 percent last year, which was nearly half of its growth for the preceding year. Bahrain has also come out of its deflationary phase as Merrill Lynch put the consumer price index for the first half at 2 percent and predicted it to remain at the same level for the same period next year. “We saw prices coming down, especially in real estate last year,” he added. “During inflation, consumption will be on the rise.” “We're starting to see prices coming up. It is indicative of people starting to purchase items and consumer goods.” The festive season demonstrated a rise in demand for consumer items and showed a revival in business, he added. “Eid was successful for businesses here,” Al Arrayed further said. Demand is also fuelled by regional visitors and even hotels reported full occupancy. “The factors, which hurt economic growth in 2011, have diminished.” Bahrain, despite lagging behind in growth indicator rankings, has the most diversified economy in the region, added Al Arrayed. “There is rapid growth in the hydrocarbons sector across the GCC in countries such as Qatar and Kuwait,” he added. “Bahrain's GDP, however, has been the most diversified across all of the GCC.” – Agencies
