Last updated: July 2nd, 2021

The Kingdom of Bahrain is an island nation in the Arabian Gulf between Saudi Arabia and Qatar. The country has about 1.6 million inhabitants, roughly half of whom are foreigners. The area of 760 square kilometres – similar in size to the city of Hamburg – is predominantly characterised by deserts. Only the northern coastal strip is arable.

Bahrain is a member of the UN, the Arab League, the Gulf Cooperation Council, the Organisation of Arab Petroleum Exporting Countries (OAPEC), the World Trade Organisation (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. A constitutional reform officially turned 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, as well as good investment conditions and infrastructure make the country an attractive location for foreign companies. Compared to its neighbouring countries, Bahrain has only small oil and gas reserves. Nevertheless, oil and gas exports continue to be the state’s most important source of income. The ongoing restructuring of the economy and industry within the framework of the 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 part of the industrial sector is made up of aluminium production and the textile industry. German companies mainly export 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 the leading centre in Islamic finance. In the World Bank’s Ease of Doing Business Index, Bahrain rose 19 places from 2019 to 2020 to rank 43rd in terms of taxes among all 190 countries surveyed worldwide. Furthermore, steady improvement is being achieved through business regulatory reforms. A key objective of economic policy is to develop Bahrain into a regional leader in finance and services, which will help the economy to recover quickly from the impact of the Covid-19 pandemic. The central location in the Gulf region and the short distances within the country make Bahrain an ideal hub for doing business with the large Asian market.

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