Bahrain

Last Updated: August 01, 2024

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 just under half are foreigners. Manama, the capital, is the country’s only major urban centeer. The area of 760 square kilometers – about the size of the city of Hamburg – is predominantly desert. Only the northern coastal strip is arable, which represents only 2.67% of the land.

Bahrain declared independence from the United Kingdom in 1971 under the leadership of Sheikh Isa, and soon pursued efforts towards regional integration, through joining the Gulf Cooperation Council in 1981 for example. In 1986, the King Fahd causeway opened, linking Bahrain with the Saudi mainland, symbol of the close economic and political links both monarchies maintain. In 2002, a constitutional reform transformed the emirate into a constitutional monarchy, following calls for an independent judiciary and an elected lower chamber of parliament.

Bahrain is a member of the UN, the Arab League, the Organization of Arab Petroleum Exporting Countries (OAPEC), the World Trade Organization (WTO) and a founding member of the International Renewable Energy Agency (IRENA)

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. While Bahrain’s oil and gas reserves are modest compared to those of its neighbors, they remain a vital source of revenue, and petroleum processing and refining make up the country’s most important industry. In fact, “Economic Vision 2030” was launched in 2008 to offset 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, making up 60% of its GDP. 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 business with the large Asian market.