Bahrain's non-energy sector growth prospects stay positive
Bahrain's economy faces a nuanced outlook for 2025, navigating a weaker global growth forecast and new US tariffs, even as regional oil output increases offer some tailwind, according to the Institute of Chartered Accountants in England and Wales (ICAEW) Economic Insight report for Q2, prepared by Oxford Economics.
Released yesterday, the report notes that the International Monetary Fund (IMF) has cut its 2025 world GDP growth forecast to 2.4 per cent from 2.8pc last year, marking the lowest expansion since 2020. This comes as most of the world, including the Middle East, continues to face tariffs of around 10pc.
Despite these headwinds, the Middle East is expected to see stronger growth this year than in 2024, largely driven by Opec+ countries accelerating the rollback of oil production cuts. Regional GDP is now projected to grow by 3.5pc in 2025, up from 1.5pc in 2024.
For the GCC, which includes the kingdom, GDP growth is forecast at 4.4pc this year. This upward revision is primarily due to Opec+ members, including Saudi Arabia and the UAE, raising oil supply faster than anticipated. Saudi Arabia's average oil production is now projected at 9.7 million barrels per day (bpd) for the year, boosting its oil sector growth forecast to 5.2pc. The UAE's oil sector is expected to grow by 6.1pc.
However, GCC countries, including Bahrain and Oman, now face a universal 10pc US tariff on their goods, superseding existing free trade agreements. While the direct impact is expected to be muted given that GCC exports to the US are only 3pc of total exports and energy is exempt, trade uncertainty could dampen near-term external demand and investment.
The increased Opec+ supply and global growth concerns pushed Brent crude oil prices to their lowest since 2021 in early April. Although prices have stabilised near $65 per barrel, continued tepid demand and building supply are expected to limit gains, with an average price of $67.3 per barrel forecast for 2025.
The kingdom's non-energy sector growth prospects remain positive, though the projected pace of expansion has been slightly lowered to 4.1pc this year for the GCC region. High-frequency data indicate resilient growth momentum, particularly in Saudi Arabia and the UAE, driven by robust hiring and significant project spending.
Tourism is also a key growth engine for the region. Dubai saw a 3pc year-on-year increase in international visitors in Q1, with hotel occupancy at 82pc. The UAE anticipates a 10.3pc rise in tourist arrivals this year, benefiting its real estate, hospitality, and infrastructure sectors.
The lower oil price environment has elevated fiscal risks for the region. For countries like Bahrain, Oman, Qatar, and Kuwait, where commodity exports account for over 70pc of government revenue, downward pressure on oil prices will strain budgets, potentially leading to wider deficits or increased borrowing. While Qatar and the UAE are still projected to run surpluses, Saudi Arabia is now forecast to have a budget deficit of 3.4pc of GDP in 2025, up from 2.8pc last year.
Despite low inflation across the region, with Bahrain and Qatar experiencing negative annual inflation, domestic interest rates are expected to remain high due to their currencies' peg to the US dollar. The US Federal Reserve is anticipated to begin aggressive rate cuts in December, which should support domestic consumption and investment next year.
The kingdom, along with other GCC nations, continues to be viewed as an attractive investment destination, with growing foreign participation in both bond and equity markets. The region saw a record 53 IPO deals last year, raising over $13 billion, as authorities aim to deepen capital markets and further diversify their economies.
Copyright 2022 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (Syndigate.info).
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
UAE Moments
20 minutes ago
- UAE Moments
Big Changes Are Coming to Al Safa Street to Cut Commute
Dubai's Roads and Transport Authority (RTA) is turning the heat up on infrastructure upgrades — and this time, it's Al Safa Street getting a full-blown glow-up. The goal? Cut travel time from 12 minutes to just 3, double traffic capacity, and smooth out access to hotspot destinations like City Walk, Coca-Cola Arena, and Downtown Dubai. RTA just announced a massive redevelopment plan for the Al Safa corridor, complete with widened roads, smart traffic signals, lush landscaping, and urban spaces built for more than just cars — think bike lanes, pedestrian walkways, and community boulevards. 'The project serves a vital district and is home to key landmarks such as City Walk, Coca-Cola Arena, educational institutions, residential and commercial areas, luxury hotels, and high-end restaurants,' said Mattar Al Tayer, Director General of the RTA. Here's What's Coming: Two New Bridges, Two Mega Tunnels And it's not just a surface-level refresh. The project includes two new bridges and two tunnels with a total span of over 3,000 metres. These will ease congestion and enable free-flow movement across critical intersections. 🛣 Bridge 1: 4 lanes, 1,005m Connects Al Wasl St → Sheikh Zayed Rd/Financial Centre St Handles up to 6,400 vehicles/hour 🛣 Bridge 2: 2 lanes, 360m Serves traffic from Al Satwa Rd → Sheikh Zayed Rd Handles 2,800 vehicles/hour 🚇 Tunnel 1: 2 lanes, 1,005m For traffic from Sheikh Zayed Rd → Al Wasl St Capacity: 3,200 vehicles/hour 🚇 Tunnel 2: 750m, 2 lanes each direction At Al Wasl & Al Safa intersection Capacity: 6,400 vehicles/hour Once finished, these enhancements will significantly ease traffic flow from Downtown and Financial Centre Street into the residential zones and hotspots across Al Wasl and Al Safa. Part of a Bigger Picture This isn't an isolated update. On June 3, RTA revealed a broader 15-km corridor plan covering Umm Suqeim, Al Safa, and Al Wasl streets. It includes: Upgrades to six major intersections Five tunnels totaling 3,850m Lanes widened to 3 in each direction Vehicle capacity to increase from 8,000 to 12,000/hour Add-ons like boulevards, cycling tracks, and public spaces The revamp supports Dubai's Vision 2040, focusing on population growth, urban connectivity, and elevated quality of life. So next time you're heading to a gig at the Coca-Cola Arena or catching dinner at City Walk, expect smoother roads — and way less stress behind the wheel.
Zawya
37 minutes ago
- Zawya
Grade A warehouses in high demand as the Kingdom strives to become a global logistics hub: JLL
The National Industrial Development and Logistics Program (NIDLP), a key component of Vision 2030, aims to increase the logistics sector's GDP contribution from 6% to 10% by 2030, and localise 70% of the supply chain Riyadh, Kingdom of Saudi Arabia: Fuelled by the National Industrial Development and Logistics Program (NIDLP) under Vision 2030, Saudi Arabia's logistics and warehousing sector is rapidly expanding, driven by a booming e-commerce market and increasing demand for Grade A warehousing, according to a new JLL whitepaper. The report, titled ' Emerging Trends Shaping Saudi Arabia's Logistics and Warehousing Market,' highlights the key factors driving this growth, along with the challenges and opportunities in powering the Kingdom's ambition to become a global logistics hub. The whitepaper also highlights significant interest and investment from both domestic and international institutional players, recognising the industrial and logistics sectors as key pillars of the Kingdom's economic diversification strategy. This ambitious growth is catalysed by Saudi Arabia's Vision 2030, which aims to position the Kingdom among the top 10 countries in the Logistics Performance Index, and the NDLP agenda, which aims to boost the sector's GDP contribution and localise 70% of the supply chain. Saudi Arabia is laying the foundation for a robust and efficient logistics ecosystem through substantial investments in transportation infrastructure, streamlined processes, and regulatory frameworks, says the whitepaper. Abhishek Mittal, Head of Industrial Advisory, MENA at JLL said: 'Saudi Arabia's position as a global logistics hub offers unparalleled access to a growing consumer market spanning three continents, making logistics and warehousing vital for high-growth sectors. Guided by Vision 2030, the Kingdom is strengthening its logistics infrastructure and transportation network, prioritising sustainability, and building strong local partnerships for seamless global commerce. This agile and resilient network facilitates efficient movement of resources, offering investors significant opportunities to capitalise on reduced costs, efficient supply chains, and increased access to a vibrant and growing market.' JLL's new whitepaper details that among the key drivers fuelling demand for Industrial and Logistics in the Kingdom are the establishment of strategically located Special Economic Zones (SEZs) and industrial cities. While 36 industrial cities offer ready-built factories, warehouses, and logistics facilities, attractive incentives and tax breaks at King Abdullah Economic City (KAEC), King Salman Energy Park (SPARK), and Jazan Economic City (JEC), are creating clusters of economic activity and driving investment and innovation. This dynamic environment attracts significant capital from global institutional investors, who are moving away from traditional Grade B/C warehouses, which currently comprise about 90% of the market. JLL's whitepaper reveals a noticeable shift towards sophisticated Grade A facilities as global institutional investors across industries, including DP World, Gulf Islamic Investments, Arcapita Capital Company, and AP. Moller–Maersk demands built-to-suit warehouses, cold storage facilities, and last-mile delivery hubs, demonstrating confidence in the Saudi market. The logistics and industrial real estate market is benefiting from Saudi Arabia's position as the largest e-commerce market in the GCC, supported by high internet penetration (97%), a young and tech-savvy population, and a growing consumer preference for online shopping. Modern commerce and e-commerce are expected to contribute around 80% to the retail sector by 2030, stimulating significant demand for modern warehouses, strategically located fulfilment centres, and last-mile delivery hubs. Meanwhile, investment trends in e-commerce warehousing are also shifting with institutional investors and real estate developers focusing on built-to-suit logistics parks catering to e-commerce and retail tenants, and real estate investment trusts (REITs) allocating more capital toward logistics assets. The whitepaper identifies the key industries of food and pharmaceuticals as leading the demand for specialised logistics solutions, including cold chain storage and temperature-controlled warehousing. Saudi Arabia has one of the largest pharma markets in the Middle East, and its healthcare infrastructure is expanding. The Kingdom imports 80% of food, and consumers are increasingly shifting online for grocery and food delivery. These industries require highly regulated and technologically advanced supply chain solutions, unlocking a high-growth opportunity for industrial real estate developers and investors in the specialised logistics sector. While the opportunities are significant, the JLL whitepaper also highlights the challenges facing companies, especially with the broader industry shift towards sustainability. Traditionally energy-intensive, Saudi Arabia's industrial and logistics sectors must align with national sustainability goals under Vision 2030 to reduce environmental footprint and achieve long-term savings. Companies that successfully navigate this transition will be well-positioned to thrive in the evolving Saudi market. The unprecedented construction boom in Saudi Arabia, aligned with Vision 2030, has injected around USD 850 billion into the construction industry, presenting unique challenges for global supply chains. To strengthen supply chain resilience, businesses and investors are adopting proactive strategies such as supply chain diversification, investing in local manufacturing to enhance self-sufficiency, implementing best practices to optimise inventory and minimise lead times, and streamlining operations by embracing digitalisation, including RFID tracking and GPS monitoring. Technological innovation, strategic partnerships, and the shift towards local production will be key to long-term sustainability and growth in the Kingdom's industrial and logistics sectors, says the report. New investments in port expansions, rail networks, and industrial zones are also crucial for transforming the Kingdom into a global logistics hub and supporting the rapid growth of its industrial and logistics capabilities. About JLL For over 200 years, JLL (NYSE: JLL), a leading global commercial real estate and investment management company, has helped clients buy, build, occupy, manage and invest in a variety of commercial, industrial, hotel, residential and retail properties. A Fortune 500® company with annual revenue of $23.4 billion and operations in over 80 countries around the world, our more than 112,000 employees bring the power of a global platform combined with local expertise. SEE A BRIGHTER WAYSM. For further information, visit About JLL MEA Across the Middle East and Africa (MEA) JLL is a leading player in the real estate and hospitality services markets. The firm has worked in 35 countries across the region and employs over 2000 internationally qualified professionals across its offices in Dubai, Abu Dhabi, Riyadh, Jeddah, Al Khobar, Cairo, Casablanca, Cape Town, Johannesburg and Nairobi. For further information, visit Media Contact: Medha Sandrasagara JLL MEA Nisha Celina | Janine Alamir Burson |
The National
2 hours ago
- The National
Dubai's biggest lender Emirates NBD to start charging for remittances to certain countries
Emirates NBD, Dubai's largest bank by assets, will start charging fees for international transfers made to certain countries through its app or online banking platform from September 1. The bank will charge a fee of Dh26.25 for remittances, including those made through DirectRemit, it said in an email to customers. DirectRemit is a platform that allows customers to transfer money via online or mobile banking in 60 seconds. However, transfers to India, Pakistan, Egypt, Sri Lanka, the Philippines, and the UK will continue to be offered free of charge to all Emirates NBD customers, a bank representative clarified in a statement. "Additionally, Emirates NBD is expanding its DirectRemit offerings to over 30 new countries ... [and] customers will no longer be charged any correspondent bank fees [in addition to the Dh26.25 fee]," the representative said. The lender will also charge a fee of up to Dh26.25 for recalling and cancelling local and international transfers, it said. The move by the lender may prompt other banks to introduce fees on remittances and may be a boon for exchange houses that offer lower charges, analysts said. 'Introducing a Dh26.25 fee from September 2025 marks a shift, and as the largest local bank sets the tone, it's possible others may follow,' Dhruv Tanna, associate vice president at DIFC-based investment and wealth management firm Phillip Capital, told The National. Some lenders such as RAKBank already impose a fee for international transfers, charging Dh15.75 for the Philippines and Dh26.25 for India, according to its website. Mashreq bank has zero fees for Pakistan and India, but charges a flat fee of Dh26.25 for the Philippines, according to its website. Others such as FAB have zero transfer fees for instant transfers to countries including India, Pakistan, Philippines, Sri Lanka, the UK and the EU, according to its website. International transfers are rarely entirely free as banks recover their costs indirectly, analysts said. "While some digital channels advertise zero fees, most banks have always made money either through transfer charges or by applying a margin to the exchange rate, or both," said Ben Bolger, founder of Squirrel Education, a company that teaches school children financial independence. Opportunity for exchange houses Exchange houses with more competitive fees are likely to benefit as banks impose charges on international transfers. 'For exchange houses, this presents a renewed opportunity to attract price-sensitive customers with lower transfer fees and competitive rates," Mr Tanna said. "Still, many mid-to high-income customers may continue to choose banks for the convenience, even with a nominal charge." Mr Bolger said that as banks adjust their terms, consumers could reconsider their options. "Exchange houses, which tend to offer more competitive rates and transparent pricing, may become increasingly attractive, despite the convenience of transferring money directly through your bank," Mr Bolger said. Emirates NBD's move to charge fees for remittances may prompt other lenders to follow suit, but it also "opens the door wider" for exchange houses and digital apps offering zero fees and better value, Jay Adrian Tolentino, a UAE-based financial coach, said. This will particularly benefit expats sending money to their home countries on a regular basis, he added. Based on World Bank data, remittances to low- and middle-income countries are expected grow by 2.3 per cent in 2024 and 2.8 per cent in 2025, reaching $690 billion in 2025.
