When the Arab Spring erupted in Egypt in early 2011, no one really expected the tiny island country of Bahrain to also be affected.For a country that was not as oil-rich as its neighbours and which depended heavily on tourism and international banking, the Bahrain economy alsohad a lot to look forward tothen. With the unrest, the country not only had to take command of the situation but also had to face one of its biggest economic upheavals.
Four years on and despite the ongoing protests, Bahrain is perhaps the only country from the Arab Spring season to come out fairly unscathed and is slowly picking up from where it left off.On the banking front, Ithmaar Bank- the Bahrain based Islamic retail bank has announced a net profit of $2.11 million for Q1 2014- an almost 50 per cent increase over the $1.43 million profit reported for the same period last year.
On similar lines and in a statement released earlier this year, Mr. Adnan Ahmed Yousef,the Chief Executive of Al Baraka Bank, expressed hope that he expected at least a15 percent growth in net profit in 2014.
And his forecast doesn’t look too speculative, if one was to go by the credit rating that Moody’s has given the country in the first quarter this year. From a Baa2 (Negative) rating given to Bahrain last year as a measure of the country’s credit-worthiness, Moody’s announced a stable rating this year on the country’s retail banking system.
This much-needed outlook would now reflect the country’s banks’ solid funding base and capital buffers and an economic recovery driven by increased government spending and construction activity within the country.
Gulf Air, Bahrain’s official carrier which had faced some tough times over the past few years has stated that its annual losses has fallen by more than BD 100 million($265.25 million) resulting in its strongest earnings in eight years. The airlines attribute the widespread damage to Bahrain’s tourism industry from anti-government protests for its reduced passenger traffic.
H.E. Shaikh Khalid bin Abdulla Al Khalifa, Deputy Prime Minister and Chairman of Gulf Air’s Board of Directors commented, “Within one year and, against the backdrop of a challenging operational environment, characterized by high fuel costs, excess capacity and economic uncertainty, this is a significant achievement…”
This comes at a time when Bahrain Air, also owned by the government has had to shut operations owing to the civil unrest and other management issues.
State-owned Bahrain Petroleum Company (BAPCO) has largely been unaffected by the situation with at least 85.5 million barrels of petroleum products being exported last year. “The petroleum products exports during 2013 totalled 85.5 million barrels compared to 83.6 million barrels in 2012, an increase of 2%. Middle Distillates accounted for 57% followed by fuel oil 19% sold primarily to the Middle East bunker market and naphtha 19% sold mostly to the Asian petrochemical manufacturers,” says BAPCO’S General Manager, Mr. Khalid Ebrahim Buhazza.
Yet, even as the country’s core sectors are picking up, others have not been so lucky. The hospitality sector, for example,was directly affected by the unrest with Bahrain’s four-star hotels losing nearly BD 30 million ($79.5 million) as room bookings took a 50 per cent plunge due to the unrest. While bigger hotels have changed strategies and cut down on staff to stay afloat, smaller hotels and restaurants were forced to close down their businesses.
Once renowned as having the freest economy in the Middle East and twelfth freest overall in the world (2011 Index of Economic Freedom-Wall Street Journal) and also as the world’s fastest growing financial centre, Bahrain has a lot to sort out internally before it can start to dream again. But for now, that the country has not faltered in its pace is good enough reason to applaud.