In a speech today, delivered at the Bahrain Association of Banks’ (BAB) CEO Luncheon, Dr Jarmo Kotilaine, Chief Economist, Bahrain Economic Development Board, focused on the excellent opportunities that Bahraini financial services companies are offered as the GCC takes a larger role in the world economy.
The speech highlighted that demographics and resource wealth are set to drive rapid economic growth in the GCC in the coming decades, and that this growth offers a range of potential opportunities for Bahraini companies.
These opportunities will be particularly strong for firms in the financial sector, as financial intermediation converges with Western standards, and as the growing and increasingly wealthy population looks for more sophisticated investment and savings products to safeguard its wealth for the long term.
The strength of Bahrain’s financial industry means that the Kingdom is particularly well placed to take advantage of this.
Speaking at the event, Dr Kotilaine explained that: “Thanks to its demographic dynamism and resource wealth, the GCC region will go through a profound economic transformation in the coming decades as its global stature continues to grow.
The GCC economy is currently worth well over a trillion dollars and this is expected to reach $2 trillion by 2020.
This will involve a massive expansion of the regional physical and social infrastructure as the economies diversify away from their traditional reliance on hydrocarbons. Areas such as financial services will experience particularly fast growth.
He continued by commenting that, “these regional trends will create a range of potential opportunities for Bahraini companies. Bahrain is a regional pioneer of economic diversification, as well as the most established financial centre in the Gulf.
This track record entails a number of competitive advantages, above all the country’s deep and diverse pool of human capital. Given the limited scale of the national market, one of Bahrain’s key challenges and opportunities is to capitalize on these regional trends.
This in turn can serve as an opportunity for a broader repositioning of many companies in a way that enables them to scale up their strengths in the broader Middle Eastern context and beyond.”
The annual pace of economic growth in Bahrain for the first three quarters of 2012 was 4.4%, led by a strong rebound in the non-oil sector of the economy, with overall growth for the year estimated at 3.9% and all main sectors of the economy recording positive growth.
Growth is also likely to pick up further in 2013 due to recovery in the oil sector and planned large-scale industrial investments and growth in infrastructure spending. The Bahraini economy is fairly resilient to external shocks and it is currently estimated that real GDP growth will exceed 5% this year.
Earlier this year, Bahrain was ranked first place in the Middle East and 12th place worldwide in the 2013 Wall Street Journal/ Heritage Foundation Economic Freedom Index.
In September 2012, the Fraser Institute’s annual Economic Freedom of the World Index ranked Bahrain as the seventh freest economy in the world.
The Kingdom is home to over 400 financial institutions and in the last year, the Kingdom has seen new offices established by a number of firms, including PineBridge Investments, Thomson Reuters and Notz Stucki.