The majority of executives interviewed for the 2019 edition of the Business Barometer: Bahrain CEO Survey carried out by Oxford Business Group (OBG) were bullish on the kingdom’s prospects for growth in the coming months, although regional political volatility remained a cause of concern among many.
As part of its survey on the economy, the global research and advisory firm asked more than 60 C-suite executives from across the kingdom’s industries a wide-ranging series of questions on a face-to-face basis aimed at gauging business sentiment.
Three-quarters of respondents described their expectations of local business conditions as positive or very positive for the coming 12 months, up from 58.5% in last year’s survey. A sizeable number (66%) also said they expected their firm to make a significant capital investment in the year ahead. The results are in line with forecasts indicating that Bahrain could expect to witness a return to more robust economic growth in 2019, following a slowdown last year.
Bahrain remains an attractive market for investors, with FDI rising by 6% in 2018, even as global levels fell by 13%. The level of transparency for conducting business in the country is seen as a key draw, with 90% of those surveyed citing it as high or very high relative to the region, up from 87% in 2018.
The introduction of legislation such as the Personal Data Protection Law also suggests that Bahrain remains ahead of the curve in terms of readying itself for the digital economy. More than half (56%) of business leaders told OBG that they expected to witness high levels of disruption from technology development in the short to medium term – a figure that is expected to rise in the coming years.
When asked what they saw as the biggest external risks to economic growth, the majority of those surveyed (79%) cited regional political volatility as their greatest concern, up from 69% in the 2018 survey, most likely because of the current increase in tensions in the Gulf. Multiple US Federal Reserve rate hikes and protectionism in trade were chosen by just 6% and 5% of executives respectively.
Commenting in his blog, Billy FitzHerbert, OBG’s Regional Editor for the Middle East, said that despite recording an ease in growth last year on the back of a slowing oil sector, Bahrain continues to benefit from having one of the most diversified economies in the region.
“The oil sector’s contribution as a share of GDP has fallen from 43.6% in 2000 to 17.8% in 2018,” he said. “Over the same period the financial services sector has grown, with its share of GDP expanding from 13.6% to 16.5%, while manufacturing’s share rose from 12.4% to 14.5%.”
FitzHerbert added that the country’s $32.5bn infrastructure development plan was expected to underpin much of the new growth forecast for the current year and 2020, while The Fiscal Balance Programme had given business sentiment a boost by reducing uncertainties around fiscal consolidation. “All this appears to be contributing to a sense that the lower growth levels have bottomed out, with optimism for the future clearly evident in our latest survey,” he noted.
FitzHerbert’s in-depth evaluation of the survey’s results can be found on OBG’s Editor’s Blog,
titled ‘Next Frontier’. All four of OBG’s regional managing editors use the platform to share their expert analysis of the latest developments taking place across the sectors of the 30+ high-growth markets covered by the company’s research.
The OBG Business Barometer: CEO Surveys features in the Group’s extensive portfolio of research tools. The full results of the survey on Bahrain will be made available online and in print. Similar studies are also under way in the other markets in which OBG operates.
