Last Updated: February 23, 2023

The Kingdom of Bahrain is an island nation in the Arabian Gulf between Saudi Arabia and Qatar. The country has about 1.5 million inhabitants, of whom slightly less than half are foreigners. The area of 760 square kilometers – about the size of the city of Hamburg – is predominantly desert. Only the northern coastal strip is arable.

Bahrain is a member of the UN, the Arab League, the Gulf Cooperation Council, the Organization of Arab Petroleum Exporting Countries (OAPEC), the World Trade Organization (WTO) and a founding member of the International Renewable Energy Agency (IRENA), which was established in 2009.

Since 1999, the country has been led by Hamad bin Isa Al Khalifa, only the second head of state since Bahrain’s independence in 1971, and a constitutional reform officially transformed the emirate into a kingdom in 2002.

Today, Bahrain is one of the most liberal economies in the world. The openness of the Bahraini market, the proximity to other important markets in the region, and the good investment conditions and infrastructure make the country an attractive location for foreign companies. Compared to its neighboring countries, Bahrain has only small oil and gas reserves. Nevertheless, oil and gas exports continue to be the state’s most important source of revenue. The ongoing restructuring of the economy and industry under Economic Vision 2030 is intended to offset the heavy dependence on oil and gas exports and create new jobs for the young population. The strongest parts of the industrial sector are aluminum production and the textile industry. German companies export mainly machinery, motor vehicles and motor vehicle parts as well as chemical products to Bahrain.

Bahrain has a pronounced service sector. Its share of GDP is just over 60 percent. With over 170 banks and other financial institutions, the kingdom is a leader in Islamic finance. A key economic policy objective is to develop Bahrain into a regional leader in finance and services, which will help the economy recover quickly from the effects of the Covid 19 pandemic. Its central location in the Gulf region and short distances within the country make Bahrain an ideal hub for doing business with the large Asian market.

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