Bahrain's economy grows 2.7% in Q1 2025 as non-oil sector, FDI show strength

13/08/2025 03:08 AST

Bahrain's real gross domestic product grew by 2.7 percent year on year in the first quarter of 2025, supported by a 2.2 percent increase in non-oil activities, according to official data.

The Ministry of Finance and National Economy revealed in its quarterly report for the first quarter of 2025, steady economic expansion was driven by robust non-oil sector performance and rising foreign investment.

Preliminary data from the Information and eGovernment Authority also showed a 5.3 percent rise in the oil sector. In nominal terms, GDP expanded by 3 percent, with non-oil and oil sectors growing by 2.8 percent and 4.6 percent, respectively. The non-oil division remained the dominant force, contributing 84.8 percent to real GDP.

Bahrain's economic growth aligns with that of its Gulf Cooperation Council neighbors. In the first quarter, Saudi Arabia's economy grew by 3.4 percent year on year, driven by strong non-oil sector performance. This trend reflects the World Bank's June projections, which forecast GCC-wide growth to reach 3.2 percent in 2025 and accelerate to 4.5 percent in 2026, following a modest 1.8 percent expansion in 2024.

"Bahrain has continued to make notable progress across several international economic and development benchmarks, reflecting the kingdom's commitment to economic diversification, global standards, and enhancing its business environment through the adoption and implementation of a number of ambitious strategies and initiatives," the ministry said in a press release.

The fastest-growing sector was accommodation and food services, which surged by 10.3 percent year on year, followed by financial and insurance activities, the largest GDP contributor, which grew by 7.5 percent.

Other key sectors also saw positive growth, including construction at 5.4 percent, education at 2.5 percent, and professional and technical services at 2.2 percent. Meanwhile, wholesale and retail trade and real estate grew by 2 percent each, while manufacturing experienced a slight decline of 0.4 percent.

Foreign direct investment stock also increased, rising by 3.5 percent year-on-year to reach 17.1 billion Bahraini dinars ($45.3 billion), signaling continued international confidence in Bahrain's economy.

On the consumer price index, the report added: "The headline CPI remained relatively stable, recording a YoY increase of only 0.1 percent during the first quarter of 2025. The relative price stability reflects the government of Bahrain's proactive efforts to mitigate global supply chain disruptions."

The Central Bank of Bahrain recorded a 19.2 percent year-on-year growth in the monetary base, reaching 6.1 billion dinars, up from 5.1 billion dinars in the same quarter in 2024.

"This increase coincided with lower interest rates, which encouraged borrowing and investment, thereby supporting economic activity," the report said.

Arab News