Bahrain Consumer & Retail Report Q4 2017
BMI View: Economic growth will remain slow over 2017, weighing on Bahrain's consumer outlook. As a result we have revised down our private consumption growth rate over 2017, coming in at a modest 2.0%.
Nonetheless, beyond 2017, growth will improve moderately supported by a healthy outlook in the labour market as well as high-income households.
The Bahraini economy will continue to show resilience amid low oil prices, thanks to strong economic diversification by regional standards and financial support from wealthier Gulf Cooperation Council (GCC) neighbours. We forecast a slowdown in Bahrain's real GDP growth to 2.6% in 2017, from an estimated 3.0% in 2016; nonetheless we remain optimistic on the country's growth outlook, with growth accelerating slightly to 2.9% in 2018. While this remains below the average of 4.0% experienced between 2010 and 2014, it is still a limited slowdown compared with the rest of the GCC.
We expect selected fiscal consolidation measures will weigh on public and private consumption in Bahrain over the coming quarters. We have revised down our real private consumption forecasts to 2.0% in 2017, from 2.8% previously. This is on the back of a reduction of government spending (although modest) will dampen private consumption and investment. Despite a rise in energy prices, it will not sufficiently improve Bahrain's weak fiscal position, particularly as production growth remains flat.
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