This profile takes stock of the trade performance and structure of Bahrain. In addition to aggregate trends in trade and foreign direct investment, a wide range of trade indicators are calculated specially for this profile using highly detailed product level data, making it a novel set of trade indicators for Bahrain and the Arab region.
The analysis reveals that Bahrain’s performance in merchandise trade and attracting foreign direct investment over the past two decades have been weak. Bahrain’s merchandise exports, expressed as a share of GDP, have closely tracked developments in oil prices and its merchandise imports had been essentially stable in most of the 2000s. Bahrain’s services trade, measured as a share of GDP, has surged since 2011, practically tripling in the following fiver-year period. Net FDI inflows had seen rather elevated levels but, as of late, have generally been weak. FDI outflows appear to be more muted since 2009. Traditional destinations for Bahrain’s exports and sources for its imports have mainly been PAFTA and ASEAN+++ countries. PAFTA and sub-Saharan African countries hold relatively favorable prospects for Bahrain’s exports, which have shown some improvement in diversification but very limited gains in sophistication.