Bahrain economy: Cruising along.

A tiny Island off the Saudi Arabian coast, and linked to Saudi Arabia via the famed causeway, an engineering marvel in the sea, Bahrain has come a long way from its nomadic past.

With oil came prosperity, which was, by and large, invested wisely, to create an economic base for the future progress of the country. The oil industry continues to dominate the economy, contributing over 10% to its GDP, 60% of its exports revenues, and over 70% to the Government kitty. It is also the major source of employment for the workforce.

The GDP of Bahrain has been running at a steady rate of 6.5% in 2007, 6.1% in 2008, and expected to be around 6% in 2009. The inflation rate is around 7%, and industrial production growth rate is about 5%. Bahrain is the only Gulf State to have a Free Trade Agreement(FTA) with the United States. Bahrain also scores high on the Heritage Foundation Index of Economic Freedom. For the year 2008, Bahrain was reported to be the 19th freest economy in the world.

Among the major economic activities of the country, apart from the oil and gas industry, are other industries like aluminium, the Banking and Financial Services, including Islamic Banking, and the contruction industry. Bahrain is making special efforts to develop the Island as an international financial center, especially for Islamic Finance and Banking.

It is noteworthy that the Bahraini Banking and Financial services industry has not suffered the same fate as its Western counterparts, mainly because it does not have exposure to toxic assets, and is better regulated.

The problems facing Bahrain in the long run, relate to the depletion of its oil and natural gas reserves, and the social problems resulting from a huge expatriate population.

Qatar economy: Rising star of the Middle East.

The small and over-prosperous Arabian Gulf State of Qatar has ambitious plans to reduce its dependence on hydrocarbon income, primarily, liquefied natural gas, to zero by the year 2020. Presently, it is the world’s largest producer and exporter of LNG.

Revenues from this precious resource(LNG), have been invested into building up an infrastructure for the future development of the country, and also reduce dependence on oil based revenue streams. In the year 2008, the country boasted a per capita GDP of USD 68,467.00 that was the highest in the world. The country continues to embark upon projects and initiatives that is aimed at retaining this level, and increasing it further.

The current global economic crisis has had an impact on the Qatari economy, with revenues down, but the adverse impact has been minimal, essentially in the form of a slowdown, that is likely to set back the time frame to achieve the set goals by a couple of years, according to official sources.

Qatar is encouraging foreign participation in its economic development, as much as it is interested in investing abroad in a range of opportunities, with the aim of creating a reserve and surplus for the future, as well as reducing its dependence on oil based revenues.

The country has been also active in internation fora, and is trying to build up an image of a moderate and a modern state in the Middle East, to act as a bridge between the West and the Gulf. It is an ambitious country with a budget and resources to match. The finesse with which the Qatari establishment handles the developing situations will determine the country’s level of success as an emerging leader in this part of the world.

Qatar, the nimble footed player.

Qatar, the oil and natural gas rich state in the Arabian Gulf, is a nimble footed operator that seizes opportunities as they come along, and capitalizes on its strength in the process.

One of the fastest growing economies in the Gulf region, it is also not lagging behind on cornering international glory through its proactive role in international affairs. The Doha Round of the WTO talks was a highlight and a feather in the cap of the ruling establishment in Qatar.

The country has been quite aggressive in diversifying its income sources away from its traditional oil and natural gas base, to industry, commerce, tourism, etc. However, much needs to be done in these areas. As a matter of fact, the Government has taken an active part in all matters of economics, commerce and industry, while encouraging the private sector to play their part in the process.

However, like other countries not directly responsible or connected with the global economic crisis, Qatar has also had to face its share of problems on the economic front. Even though the Banking sector has been doing quite well, with 2008 being a golden year, the Government has had to intervene in the sector, imposing certain restrictions, in order to restore public confidence, and avoid the spread of a negative sentiment, affecting the markets.

A special mention needs to be made of the Islamic Banking sector that has done really well, crisis or no crisis, and has remained practically immune from the virus of toxic assets affecting their conventional cousins in the western world. This is mainly because of their ethical business practices, and avoidance of highly risky and unethical business practices and wheeling and dealing. As a result, the conventional Banks, in large numbers, have been going in for the establishing Islamic Banking subsidiaries to face the troubled times better.

The coming years pose a challenge to Qatar, but given its past record of nimble footed negotiation of troubled times, this middle eastern state may trot ahead of many of its counterparts in the Gulf.