DUBAI: Bahrain’s economy grew by 1 percent quarter-on-quarter in April-June after shrinking in the previous three months, but annual growth decelerated to its slowest pace since 2008 as the impact of unrest continued to stifle activity, data showed Sunday.
The small non-OPEC oil exporter saw its real gross domestic product falling by 1.4 percent in the first three months of 2011 compared with the previous quarter, its first quarterly contraction since the global financial crisis in late 2008.
On an annual basis, GDP growth in the Arab island kingdom – the smallest economy in the Gulf at some $14 billion – decelerated to 0.8 percent in the second quarter from 1.8 percent in January-March 2011, the sixth slowdown in a row, the data from the Central Informatics Organization showed.
“In terms of year-on-year it could have been worse but it still shows that 2011 is going to be a pretty tough year for the economy,” said Paul Gamble, from Jadwa Investment in Riyadh.
“The issue is still the legacy of the unresolved political tensions that we had earlier in the year,” he said.
The island kingdom, a financial hub where nearly $9 billion in mutual funds is parked, had been rocked in February and March by its worst public unrest since the 1990s.
About 30 people died in a month of unrest which saw Saudi troops enter the country, bank and shops close and triggered capital flight. At the time, NCB Capital estimated economic losses at $1 billion, which made up 17 percent of the first quarter GDP.
Analysts polled by Reuters in June slashed their 2011 growth forecasts to 2.7 percent from 3.4 percent expected in March.
“What seems to happen obviously is further slowdown,” said Giyas Gokkent, head of research at National Bank of Abu Dhabi.
In July, Central Bank Governor Rasheed al-Maraj expected the economy to expand by 3 percent this year, less than the 4.5 percent seen by the Finance Ministry in March.
Bahrain’s financial sector, which accounts for about a quarter of the GDP, has been only slowly picking up from the global financial crisis.
It grew 1.7 percent year-on-year in real terms in April-June, up from a 1.3 percent rise in the previous quarter.
Hotels, the most heavily hit by the uprising against the Sunni-led government, booked a 29.3 percent drop in the second quarter after a 30.3 percent output slump in January-March.
The real estate sector, which has yet to return to levels seen before the global crisis, was down 5 percent in the second quarter, the data showed.
The country’s nominal GDP increased by 19.8 percent year-on-year to 2.4 billion dinars ($6.3 billion) in the second quarter, the data also showed.