Exchange Currency

Economy of Bahrain

Bahrain has taken great strides in diversifying its economy and its highly developed communication and transport facilities make Bahrain home to numerous multinational firms with business in the Gulf.

As part of its diversification plans, Bahrain implemented a Free Trade Agreement (FTA) with the US in August 2006, the first FTA between the US and a Gulf state. Bahrain's economy, however, continues to depend heavily on oil. Petroleum production and refining account for more than 60% of Bahrain's export receipts, 70% of government revenues, and 11% of GDP.

Other major economic activities are production of aluminum — Bahrain's second biggest export after oil — finance, and construction. Bahrain competes with Malaysia as a worldwide center for Islamic banking and continues to seek new natural gas supplies as feedstock to support its expanding petrochemical and aluminum industries.

In 2011 and 2012, Bahrain experienced economic setbacks as a result of domestic unrest, however, several factors indicate that the economy is beginning to recover, such as the return of the formula one race and tourist cruise ships to Bahrain.

Economic policies aimed at restoring confidence in Bahrain's economy, such as the suspension of an expatriate labor tax and frequent bailouts of Gulf Air, will make Bahrain's foremost long-term economic challenges — youth unemployment and the growth of government debt — more difficult to address.




Discover more about Bahrain