View the information below regarding the economy of Bahrain. The summary and statistics contains
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GDP (2002): $7.7 billion.
Real GDP Growth Rate (2002 est.): 5.1%.
Per capita GDP (2002 est.): $14,000.
Natural resources: Oil, natural gas, fish, pearls.
Agriculture (less than 1% of GDP): Products--With the exception of eggs, vegetables, dates, and fish, most food is imported. Types--oil and gas (16.5 % of GDP), manufacturing (12.2% of GDP), , aluminum.
Services: Finance (15.7 % of GDP), transport and communications (8.9% of GDP), real estate (7.8% of GDP), .
Government Services(10.4% of GDP).
Trade (2002--about 13.3 % of GDP): Exports--$5.8 billion: oil and other mineral products, base metals, textiles. Major markets--India (4.5 %), U.S. (3.2%), Saudi Arabia (2.3%), Japan (1.7%), South Korea (1.7%). Imports--$5.0 billion: crude oil, machinery and appliances, transport equipment, foodstuffs. Major suppliers--Saudi Arabia (30.2%), U.S. (11.7%), France (7.1%), U.K. (6.1%),Germany (5.6%).
The first Gulf state to discover oil, Bahrain has worked to diversify its economy over the past decade. Bahrain has stabilized its oil production at about 40,000 barrels per day (b/d), and reserves are expected to last 10-15 years. Revenues from oil and natural gas currently account for 16.5% of GDP and provide about 60% of government income. The Bahrain Oil Company refinery built in 1935, the first in the Gulf, has a capacity of about 250,000 b/d. Since 1980, 60% of the refinery has been owned by the Bahrain National Oil Company and 40% by the U.S. company Caltex. Saudi Arabia provides most of the crude for refinery operation via pipeline. Bahrain also receives a large portion of the net output and revenues from Saudi Arabia's Abu Saafa offshore oilfield. The Bahrain National Gas Company operates a gas liquefaction plant that utilizes gas piped directly from Bahrain's oilfields. Gas reserves should last about 50 years at present rates of consumption. The Gulf Petrochemical Industries Company is a joint venture of the petrochemical industries of Kuwait, the Saudi Basic Industries Corporation, and the Government of Bahrain. The plant, completed in 1985, produces ammonia and methanol for export. Growth in the hydrocarbons sector will be contingent upon new discoveries -- Bahrain awarded exploration rights to Malaysia’s Petronas and the U.S.’ Chevron Texaco after the resolution of its long-standing territorial dispute with Qatar, but no meaningful finds have been announced to date. Bahrain's other industries include the majority state-owned Aluminum Bahrain (Alba), which operates the largest aluminum smelter in the world outside Eastern Europe with an annual production of about 307,000 metric tons (mt)--and related factories, such as the Aluminum Extrusion Company and the Gulf Aluminum Rolling Mill. Other plants include the Arab Iron and Steel Company's iron ore pelletizing plant (4 million tons annually) and a shipbuilding and repair yard.
Bahrain's development as a major financial center has been the most widely heralded aspect of its diversification effort. Bahrain is a regional financial and business center. International financial institutions operate in Bahrain, both offshore and onshore, without impediments, and the financial sector is currently the second largest contributor to GDP. More than 100 offshore banking units and representative offices are located in Bahrain, as well as 65 American firms. Bahrain has also made a concerted effort to become the leading Islamic finance center in the world, standardizing regulations of the Islamic banking industry. It currently has 26 Islamic banks – the largest concentration of Islamic financial institutions.
Bahrain is working to develop other service industries such as information technology, healthcare and education. The government has used its oil revenues to build an advanced infrastructure in transportation and telecommunications. The transport and communications sector grew by almost 9% in 2002 and is likely to expand as the government proceeds with liberalization of the state-owned telecommunications industry. The state monopoly – Batelco – was broken in April 2003. Bahrain's international airport is one of busiest in the Gulf, serving an average of 580 flights a week. A new air traffic control tower, part of a program to upgrade and modernize the airport, is due for completion in June 2004. A modern, busy port offers direct and frequent cargo shipping connections to the U.S., Europe, and the Far East.
Liberalization of the water and power industries is also planned.
Regional tourism is also a significant source of income. The government continues to favor large-scale tourism projects. In 2003 it awarded several contracts to develop a state-of-the art international horse racing track and tourist complex.
Government revenues continue to be largely dependent on the oil industry. Bahrain has received significant budgetary support and project grants from Saudi Arabia, Kuwait, and the United Arab Emirates. The reconstituted parliamentary process has produced spirited debate over government spending, particularly defense spending, but no actual reductions. Ministry of Defense spending will account for 20% of current spending in 2003 and 2004 based on the budget approved by parliament in May 2003. The Ministry of Education and Ministry of the Interior are the second and third largest spenders. The bulk of capital outlays have been allocated to improving housing and infrastructure in line with government efforts to raise the standard of living of the Shi’a population and to attract foreign investment.
The government has also started to extend protections to workers. Private sector employees won permission to form unions in late 2002; King Hamad has given his tentative approval for the formation of unions in government departments.