Bahrain’s Gross Domestic Product (GDP) saw a notable increase of 2.7 percent and 3.0 percent at constant and current prices, respectively, in the first quarter of 2025 compared to the same period of the previous year, according to national accounts estimates released by the Information & eGovernment Authority (iGA).
The growth is primarily attributed to an uptick in both oil and non-oil sectors. Oil activities reported a 5.3 percent rise at constant prices and a 4.6 percent increase at current prices, while non-oil activities expanded by 2.2 percent and 2.8 percent at constant and current prices, respectively.
Among the standout non-oil activities, accommodation and food services exhibited significant growth, achieving a rate of 10.3 percent, followed closely by financial and insurance activities with a growth rate of 7.5 percent, and construction, which grew by 5.4 percent at constant prices.
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Investor confidence rises
Bahrain’s economic growth in Q1 2025 reflects an ongoing trend of diversification, as non-oil sectors constituted approximately 84.8 percent of real GDP, as noted in the Ministry of Finance and National Economy’s quarterly report. Furthermore, inward foreign direct investment rose by 3.5 percent year-on-year to BHD17.1 billion during the first quarter, highlighting increasing investor confidence in the Kingdom’s economic environment. These developments are in line with Bahrain’s strategic initiatives aimed at enhancing economic diversification, boosting global competitiveness, and sustaining growth in non-oil sectors while facilitating the recovery of the oil sector.
Recently, the Central Bank of Bahrain announced a significant increase in financial institution licenses from early 2024 to mid-2025, with 16 new institutions approved and 52 license applications currently under advanced review. This steady growth emphasizes Bahrain’s appeal as a leading destination for digital financial services, with international applications making up about 75 percent of the total 68. These institutions are expected to generate over 850 jobs initially, with further opportunities as they grow. The new licenses encompass two wholesale banks, and additional banking applications are under review.
