(Adds details, background)
By Andrew Torchia
DUBAI Feb 12 Bahrain's economic growth is
expected to pick up sharply this year on the back of a stronger
oil sector, large industrial investments and a robust regional
economy, the government said on Tuesday.
The Economic Development Board predicted gross domestic
product would expand 6.2 percent this year before easing to 3.4
percent in 2014. It estimated GDP grew 3.9 percent in 2012, up
from 1.9 percent in 2011. It
The economy of the tiny island kingdom has been recovering
gradually since it was hit hard in the first quarter of 2011 by
pro-democracy protests led mainly by majority Shi'ite Muslims.
The government crushed those protests but scattered unrest
has continued since then, weighing on foreign investment and the
GDP growth decelerated for most of last year, from 5.9
percent year-on-year in the first quarter to 3.1 percent in the
third quarter, the board said without giving a number for
Output from the Abu Safa oil field which Bahrain shares with
Saudi Arabia was below normal for most of 2012 because of
technical problems, hurting growth, the board said. Bahrain
relies on the field for some 70 percent of its budget revenue.
But the technical problems were fixed in November and this
will boost economic growth in 2013, along with higher output
from an onshore Bahraini oil field, the board said.
Meanwhile, the economy will benefit this year from major
industrial investments, including a $4.8 billion oil refinery
upgrade and the building of a $2.2 billion production line at
Aluminium Bahrain, it said.
Most of the non-oil private sector grew solidly last year
and bank lending began to pick up, setting the sector up for
strong growth in 2013, the board added.
After the unrest erupted in 2011, wealthier Gulf Arab states
pledged $10 billion in aid to Bahrain over 10 years. This money
is expected to start flowing in 2013-2014, stimulating the
economy; the board said Saudi Arabia had last month set a plan
to send $448 million to Bahrain, to be spent on housing,
education and other projects.
The board predicted inflation would stay stable at 3.0
percent in 2013 and 2014, flat from last year's level, and that
the government would run a small budget surplus of 0.6 percent
of GDP this year after a deficit of 1.0 percent in 2012. The
forecasts assume an Arab Medium oil price of $105 per barrel
between 2012 and 2014.
(Editing by Jeremy Gaunt)