‘Bahrain Has Always Looked At The World With A Pair Of Welcoming Eyes’
The chief economist of Bahrain’s Economic Development Board, Jarno Kotilaine, speaks to BW Businessworld about the growth opportunities in the economy.
How does Bahrain look at the world from inside out?
Bahrain has always looked at the world with a pair of welcoming eyes. There is a growing attention now in some of the new things that are happening with things like fintech and, GCC, as a whole, with all the investments that are underway, which has transformed this region. Of course, some people are raising their eyebrows in part to the political risks in other parts of the region. However, I would hasten to add it is not a GCC-specific story.
What kind of economic development is happening in Bahrain?
Bahrain’s growth dynamics in the regional context is a unique economy, and it is a story of considerable resilience. The past few years has been unusual for the global economy, but the Bahrain economy has continued to grow through thick and thin. The slowest growth was in 2011, which was at 2.1 per cent. More recently, the growth has accelerated to a little over 3 per cent. This is reflective of the structural growth drivers of the economy. Bahrain is the most diverse economy in the region.
What are the growth drivers for the country?
Growth has to be more productivity-led in Bahrain and it has to move from the subsidies like in the past. It will also be led through new areas such as fintech, which is an important area, which includes startups and entrepreneurship. There are lots of opportunities even in the domestic economy. Bahrain is the most diverse economy in the region. Oil today is less than 20 per cent of GDP.
What is your view on the ratings downgrade on the Bahrain’s fiscal position?
What this decision looks at is the oil side. The GCC countries are to varying degrees dependent on oil for their fiscal and external positions. When oil price turns south, questions about the fiscal position begin to arise. Now GCC countries are pursuing structural reforms designed to sustainably reduce their fiscal and external reliance on oil. Bahrain has implemented a wide range of measures. Others are work-in-progress like the multi-year programme on reducing subsidies. The government wants to implement the programme gradually, so it is not too economically disruptive. Rating agencies want faster progress. The plan that the Bahraini government has put forward is premised on the idea of attaining a fiscal balance within six years.
