The Report: Bahrain 2024

Economy

Bahrain's economy is experiencing growth, guided by Bahrain Economic Vision 2030, the kingdom’s long-term socio-economic development plan, and driven by a dynamic private sector and rising foreign investment. Relatively low inflation and interest rate cuts in September and November 2024 enhance its appeal as a business destination. The country's robust financial services sector supports private sector diversification, while the Central Bank of Bahrain fosters a favourable fiscal and regulatory environment, focusing on start-ups and small and medium-sized enterprises. Multi-sector growth has insulated the economy from global energy price fluctuations, a trend likely to continue with ongoing infrastructure development and talent investments. Despite fiscal challenges and sector declines, Bahrain’s investment-friendly environment, along with a future-ready workforce, positions the kingdom well to attract more international companies. Additionally, deepening the stock markets is a priority to diversify the economy and further boost growth in the coming years.

This chapter includes interviews with Abdulla bin Adel Fakhro, Minister of Industry and Commerce; and Shaikh Abdulla bin Khalifa Al Khalifa, CEO, Bahrain Mumtalakat Holding Company.

Sustainability

Bahrain has made significant gains in its efforts to diversify away from hydrocarbons. The kingdom’s goals include a 30% reduction in carbon emissions by 2035 and carbon neutrality by 2060. Recent years have seen progress in renewable energy, sustainable urban development, ESG financing and water conservation. The country’s efforts are guided by Bahrain Economic Vision 2030, the country’s long-term socio-economic development roadmap, as well as international partnerships, aligning with global sustainability frameworks. Key initiatives including Blueprint Bahrain and the Green Factory Label programme, both of which launched in December 2023, reflect Bahrain’s commitment to reducing carbon emissions and promoting the green economy. Ongoing collaboration between the government, private sector and international partners will be essential for scaling up efforts towards environmental preservation. Bahrain’s strategic vision and initiatives provide a positive outlook for reaching long-term sustainability goals while maintaining economic growth.

This chapter includes interviews with Noor bint Ali Alkhulaif, Minister of Sustainable Development and Chief Executive of Bahrain Economic Development Board; Usman Ahmed, Group CEO, National Bank of Bahrain; and Kamal bin Ahmed Mohamed Ahmed, President, Electricity and Water Authority.

Banking

Bahrain has established itself as a global financial services destination, with the financial sector being the largest contributor to the economy, accounting for 17.8% of GDP in 2023. The kingdom’s financial technology infrastructure is expanding banking access to underserved demographics, and its financial services authorities are adopting policies to keep Bahrain influential in global banking development. The sector has also seen technological innovation in recent years with regulations introduced that cover open banking, payment systems, crowdfunding and crypto-assets. The kingdom’s central bank sandbox plays a key role in maintaining regulatory agility and consumer confidence. Bahrain’s banking system, guided by far-sighted policies and growing collaboration between start-ups and banking companies suggests sustained growth for the kingdom’s financial services industry.

This chapter includes an interview with Abdulwahed AlJanahi, Chief Executive, Benefit.

Insurance

Bahrain’s insurance sector saw both conventional and Islamic underwriters reporting strong premium and earnings in 2023. The outlook for 2024 and beyond is even more promising, with projected economic growth of 3%, driven by the non-oil sector. This development is expected to increase demand for commercial, property and other insurance products. Additionally, the rollout of a mandatory health insurance scheme, expected to be fully operational in early 2025, should further boost the sector. The insurance market is projected to expand at a compound annual growth rate of 2.6% between 2023 and 2028, potentially reaching $800m by the end of the period, with mergers and acquisitions expected to improve efficiency and scale.

Capital Markets

Bahrain’s capital markets are aiming to increase activity, with the GCC region experiencing a surge in initial public offerings. Both corporate and government entities are turning to debt and securities, particularly sovereign bonds, which attract investors seeking to reduce portfolio risk amid global economic uncertainty. The kingdom’s diversified economy, bolstered by a robust financial services sector, helps reduce its reliance on hydrocarbons. The country’s forward-thinking, risk-averse policies support this growth, while efforts to strengthen regional stock market cooperation are resulting in mergers and cross-listings. Initiatives to help smaller companies benefit from market flotation are poised for growth, with potential policy adjustments expected to accelerate progress. With high interest rates, traditional bonds and sukuk (Islamic bonds) remain attractive, while cryptocurrency regulations introduced in 2023 and 2024 should enhance Bahrain's competitiveness in this emerging market.

This chapter includes an interview with Sheikh Khalifa bin Ebrahim Al Khalifa, CEO, Bahrain Bourse.

Energy & Utilities

Bahrain, the first Gulf country to discover oil, is navigating the energy transition by focusing on renewables, energy efficiency and sustainability. Legislation introduced in 2023 rebranded the parent company of Bahrain’s oil and gas companies as Bapco Energies, highlighting the kingdom’s readiness to embrace opportunities in the energy transition and achieve sustainable targets. The kingdom targets for renewable energy to constitute 5% of the local energy mix by 2025 and 20% by 2035. In efforts to reach these targets, in February 2024 Bahrain launched a tender for a 100-MW solar project, which is set to be the country’s first utilities-scale solar power project. With strong corporate legal frameworks, political stability and well-developed infrastructure, Bahrain is well-positioned to expand its non-oil economy.

This chapter includes interviews with Mohamed bin Mubarak Bin Daina, Minister of Oil and Environment; and Somaya Al Radhi, Country Manager, Schlumberger Bahrain.

Tourism

Known for its long history in hospitality, Bahrain is expanding its tourism offerings, which include cultural, heritage, adventure and coastal attractions. Manama’s selection as the Gulf Tourism Capital for 2024 highlights the country’s rising prominence in the regional tourism landscape. With new hotels, improved transport connectivity and government commitment to developing the sector, the kingdom is set to boost its position in the Gulf tourism market. Bahrain’s concentrated variety of attractions and its strategic focus on diversification give the kingdom a competitive edge to attract more tourists, business leaders and conference delegates in the coming years.

This chapter includes interviews with Fatima bint Jaafar Al Sairafi, Minister of Tourism; and Sara Ahmed Buhiji, CEO, Bahrain Tourism and Exhibitions Authority.

Transport

Bahrain’s transport sector is a key driver of the kingdom’s economy, supporting trade, logistics and tourism. The sector saw significant growth in 2023, fuelled by strong government support and increasing private sector involvement, underpinned by a $30bn plan to expand air, maritime, rail, road and urban connectivity. The transport industry accounted for 7.4% of GDP in 2023, up 3.1% from 2022. Major projects, including the Bahrain Metro, the modernisation of Khalifa Bin Salman Port, land reclamation to expand the kingdom’s landmass and new regional road and rail links, are set to drive further growth. These developments, coupled with a favourable regulatory ecosystem, are attracting foreign direct investment and creating high-value jobs, supporting the kingdom’s diversification and sustainable development efforts away from oil dependency.

This chapter includes interviews with Mohamed Yousif AlBinfalah, CEO, Bahrain Airport Company; and Matthew Luckhurst, Managing Director, APM Terminals Bahrain.

Construction & Real Estate

Bahrain’s construction and real estate sectors are key to the kingdom’s economic diversification. After overcoming challenges including the Covid-19 pandemic, supply chain issues and cost volatility, these industries are rebounding strongly. While inflation and high interest rates have impacted demand, the outlook remains positive with a robust pipeline of projects under way. The real estate sector is expected to perform well through 2024 and 2025, with ongoing projects and a focus on meeting the needs of a growing population. The hospitality sector, in particular, is likely to see increased investment as tourism becomes a key priority, leading to more hotels, apartments, shopping malls and entertainment venues.

This chapter includes interviews with Amna bint Ahmed Al Romaihi, Minister of Housing and Urban Planning; Sheikh Mohammed bin Khalifa Al Khalifa, former CEO, Real Estate Regulatory Authority; and Amin Alarrayed, CEO, Naseej.

Industry

Industry, including large aluminium plants and numerous smaller enterprises, represented 14% of the economy in 2023 with aims to increase its contribution to 14.5% by 2026. The kingdom has long prioritised manufacturing and industrial activities, supported by a sophisticated financial and governmental network. Bahrain is embracing the Fourth Industrial Revolution, expanding smart factory infrastructure and advancing robotics and artificial intelligence-driven enterprises. The kingdom’s entrepreneurial culture, tax incentives, and positive relations with neighbouring countries create strong opportunities for export growth. The government aims to enhance local value-added production and the Made in Bahrain trademark, viewing industry as a key sector for future employment opportunities and economic diversification.

This chapter includes an interview with Ali Al Baqali, CEO, Aluminium Bahrain.

ICT

Bahrain’s expanding ICT sector highlights the country’s commitment to economic diversification and innovation, positioning it as a globally competitive economy. With a young, tech-savvy population and government investment in digital infrastructure and talent development, the kingdom has become a destination for technology start-ups, attracting numerous international ICT companies. The country boasts high smartphone penetration and mobile subscriptions, alongside the rapid rollout of 5G infrastructure, ensuring widespread digital connectivity for individuals and businesses. These initiatives aim to boost productivity and support economic growth, with total telecommunications revenue in terms of market value projected to reach $696m by 2028, up from $517m in 2023.

This chapter also includes an interview with Mohammed Ali Al Qaed, CEO, Information & eGovernment Authority.

Education & Health

Bahrain has made significant progress in its healthcare and education systems over the past six decades. The introduction of compulsory schooling in 1919 and a health-for-all policy in 1959 led to substantial sector growth. The government is set to launch a universal health insurance scheme in early 2025, which is expected to expand coverage and improve services. Increased funding should enhance coordination between the public and private sectors and support the digitalisation of services and medical records. Innovative policies in education are improving learning outcomes, with technological advances playing a key role. Additionally, efforts to close the skills gap between education and the labour market are further strengthening Bahrain's education system. These initiatives reflect the kingdom’s commitment to enhancing both sectors for the benefit of its citizens and future workforce.

This chapter includes interviews with Mohammed bin Mubarak Juma, Minister of Education; Maryam Hasan Mustafa, CEO, Bahrain Education & Training Quality Authority; Dr Jalila bint Al Sayyed Jawad Hassan, Minister of Health; and Dr George Cheriyan, CEO and Chief Medical Officer, American Mission Hospital.

Tax

Bahrain’s tax landscape has evolved in recent years, with the introduction of excise tax in 2017 and value-added tax in 2019. Since then, new regulations have been aimed at improving financial oversight. Notably, a domestic minimum top-up tax law is set to be implemented in 2025, impacting Bahraini entities that are part of large multinational enterprise groups. As a financial leader in the Middle East, Bahrain has focused on economic diversification, promoting sectors including technology, manufacturing and logistics. The kingdom encourages international investment by allowing 100% foreign ownership in various sectors. These initiatives demonstrate Bahrain’s proactive approach to evolving its tax framework and enhancing its position as a competitive business destination.

This chapter includes a viewpoint from Mubeen Khadir, Head of Tax and Corporate Services, KPMG Fakhro.

The Guide

This chapter contains selected listings of some of the country’s top hotels, helpful tips for business and leisure travellers, and other useful suggestions for travel to Bahrain.

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