EEccoonnoommiicc RReeppoorrtt 22000077 Table of Contents List of Tables.............................................................................................................iii List of Charts...............................................................................................................v Preface ........................................................................................................................ vi Executive Summary ................................................................................................vii I. International Economic Developments .....................................................1 Overview............................................................................................................................. 1 World Output..................................................................................................................... 1 Inflation .............................................................................................................................. 2 Unemployment.................................................................................................................. 3 Interest Rates...................................................................................................................... 3 Exchange Rates .................................................................................................................. 4 Equity Markets .................................................................................................................. 5 Commodity Markets......................................................................................................... 6 II. Economic Trends in the GCC ......................................................................8 Economic Performance..................................................................................................... 8 Regional Integration and Developments ..................................................................... 9 Outlook and Policies ...................................................................................................... 10 III. Bahrain Economic Performance ................................................................11 Gross Domestic Product and Economic Growth....................................................... 11 The General Level of Domestic Prices ........................................................................ 12 Labour Force..................................................................................................................... 13 International Rankings .................................................................................................. 14 Bahrain Policy Developments ...................................................................................... 17 Economic Liberalisation Agreements .............................................................................. 17 Labour Market................................................................................................................. 18 Structural Developments ................................................................................................ 19 E‐Government ................................................................................................................. 20 Private Sector Initiatives................................................................................................ 22 Property and Real Estate Developments ......................................................................... 22 Air Carriers ..................................................................................................................... 25 Telecommunications........................................................................................................ 25 Industrial Developments ................................................................................................. 27 IV. Monetary Developments............................................................................29 Money Supply Developments...................................................................................... 29 Domestic Interest Rates ................................................................................................. 32 Exchange Rate Developments....................................................................................... 36 Issuance of Public Debt Instruments .......................................................................... 37 V. Financial Sector Developments.................................................................40 i Structure of the Bahrain Financial System................................................................. 40 Retail Banks ..................................................................................................................... 43 Wholesale Banks ............................................................................................................. 44 Islamic Banks................................................................................................................... 46 Consolidated Banking System ..................................................................................... 48 Domestic Credit............................................................................................................... 52 Credit Card Survey ......................................................................................................... 56 Mutual Funds................................................................................................................... 58 Manpower Survey........................................................................................................... 60 VI. Public Finance ..............................................................................................63 Revenues........................................................................................................................... 64 Expenditure ...................................................................................................................... 65 VII. Foreign Trade and Balance of Payments .................................................67 Trade Balance................................................................................................................... 67 Exports ............................................................................................................................ 69 Imports ............................................................................................................................ 70 Direction of Non‐Oil Trade........................................................................................... 71 Non‐Oil Trade with GCC Countries ........................................................................... 73 Balance of Payments (BOP)........................................................................................... 75 Current Account ............................................................................................................. 75 Capital and Financial Account........................................................................................ 75 International Investment Position (IIP)...................................................................... 78 VIII. The Bahrain Stock Exchange .....................................................................79 Main Trading Indices..................................................................................................... 80 Price Movements............................................................................................................. 84 Profits of Listed Companies.......................................................................................... 84 Developments in Market Capitalisation and Share Issue Base ............................. 85 New Companies Listed on the Bahrain Stock Exchange......................................... 87 Factors Affecting BSE Activity ..................................................................................... 87 IX. Statistical Appendix ....................................................................................89 Economic Indicators ....................................................................................................... 89 Financial Sector Indicators ............................................................................................ 92 ii List of Tables Table I ‐I: Summary of World Output ................................................................................. 2 Table I ‐II: Exchange Rates of Major Currencies against the SDR ................................... 4 Table I ‐III: Commodity Prices.............................................................................................. 7 Table II ‐I: Aggregate Growth Indicators for the GCC...................................................... 9 Table III ‐I: Crude Oil Production and Refining .............................................................. 12 Table III ‐II: Consumer Price Index (2006 = 100) .............................................................. 13 Table III ‐IV: Employment................................................................................................... 14 Table III ‐V: Government of Bahrain Foreign Currency Credit Ratings........................ 15 Table III ‐VI: Bahrain Human Development Index, 2007 ............................................... 16 Table III