Bahrain’s Economy Grows 2.5% on Strong Non-Oil Performance

Bahrain’s economy grew by 2.5 percent year on year in the second quarter of 2025, driven by the strong performance of non-oil sectors. The Information and eGovernment Authority, along with the Ministry of Finance and National Economy, reported that non-oil activities expanded by 3.5 percent and now account for over 85 percent of the country’s real GDP. The figures reflect the continued success of Bahrain’s efforts to diversify its economy and reduce dependence on oil revenues.

Economic Reforms Support Continued Growth

The growth momentum builds on the Economic Recovery Plan, launched in October 2021, which aims to strengthen post-pandemic recovery and ensure fiscal sustainability. This initiative is a key pillar of Bahrain’s broader Economic Vision 2030, which focuses on creating a balanced economy that is competitive, fair, and sustainable. The latest data confirm that Bahrain’s economic diversification strategy is delivering measurable results, with expanding sectors contributing significantly to overall growth.

Non-Oil Sectors Lead the Expansion

Among non-oil industries, professional, scientific, and technical services saw the largest jump, rising by 12 percent compared to the same period last year. Wholesale and retail trade increased by 6.7 percent, while real estate activities grew 4.7 percent. Accommodation and food services rose 4.6 percent, showing stronger demand from both residents and tourists. Other key sectors such as construction, manufacturing, finance, and information and communications also recorded steady improvements, highlighting a broad-based expansion beyond oil and gas.

Strong Foreign Investment Inflows

Bahrain continues to attract foreign investors, with inward foreign direct investment (FDI) stock rising 5.4 percent year on year in the second quarter of 2025. The total FDI reached 17.5 billion Bahraini dinars (about $46.4 billion), reflecting growing confidence in the Kingdom’s non-oil economy. This sustained inflow of capital supports new projects in technology, logistics, and manufacturing, boosting employment and long-term productivity.

Comparison with First Quarter Results

The second-quarter results build on a solid start to the year. In the first quarter of 2025, Bahrain’s real GDP increased by 2.7 percent, supported by a 2.2 percent expansion in non-oil activities and a 5.3 percent rise in oil production. In nominal terms, the economy grew by 3 percent, with non-oil and oil sectors rising 2.8 percent and 4.6 percent, respectively. Non-oil industries remained the country’s key driver, contributing 84.8 percent of total real GDP.

Recognition in Global Rankings

Bahrain’s progress has also been reflected in several international reports. The Kingdom ranked first among Arab countries in Gallup’s Global Safety Report 2025 Law and Order Index, with 90 percent of respondents saying they felt safe at night. It recorded the highest improvement in the Global Innovation Index 2025 within the North Africa and Western Asia region, climbing 10 positions. Bahrain also placed fifth in both the 2025 Greenfield FDI Performance Index and the Finance Skills Indicator in the IMD World Talent Ranking, underlining its growing global competitiveness.

Part of a Wider Gulf Economic Trend

Bahrain’s strong performance mirrors broader economic trends across the Gulf region. In the same quarter, Saudi Arabia’s GDP rose 3.9 percent, while Abu Dhabi’s economy expanded 3.8 percent, supported by a 6.6 percent increase in non-oil sectors. Oman recorded 2.1 percent growth, also driven by diversified activity. These figures highlight the shared progress among Gulf states in implementing economic diversification strategies that ensure stability and sustainable growth.

With solid non-oil momentum and continuous investment inflows, Bahrain’s economy is well-positioned to sustain growth through the remainder of 2025. The government’s continued focus on reforms, innovation, and global competitiveness will likely enhance long-term resilience. Bahrain’s experience offers a model for small economies seeking to balance diversification with stability while maintaining strong ties with regional markets.