BAHRAIN MARKET REVIEW 2020

By Vincetan Basil Sooriyaarachchi

Bahrain’s construction industry was badly impacted but remained active in a slower rate
of progress without being hit by any lockdown or imposing a curfew and the like. Spread
of Covid-19 in Bahrain impacted the progress of the ongoing projects despite the
implementation of several strategies to combat the impact.
The Government of Bahrain, spearheaded by the National Taskforce for Combating the
Coronavirus, and its associated ministries and authorities have been quick to implement
their own strategies to limit both the spread of Covid-19 and its impact upon Bahrain's
economy, with such strategies receiving high praise from the World Health
Organization. From a logical perspective, experts in the Construction sector assumes
that COVID-19 can be classified as a “force majeure” event. Construction Lawyers and
experts in the industry working on the preparation of potential legal actions to claim an
extension of time or financial entitlement due to virus impact.
Based on the status, the cost of the future projects and rate of progress of projects may
increase by considerable margin. According to ongoing reviews, preliminary costs of
setting up sites to meet the COVID-19 restrictions, increment of cost of PPE based on
the expected high demand , allocation of COVID-19 Compliance Officers, etc. that are
required over and above the previous “norm” of site set up will come at a cost.
Apart from the construction sector, tourism of the Bahrain has been affected drastically
due to global travel restrictions and the regional restrictions.
Bahrain's economy shrank 1.1% year-on-year in the first quarter of 2020, following a
0.4% contraction in the previous three-month period. The non-oil sector, where the
repercussions of the Covid-19 pandemic were more evident, contracted 1.7%, led by
restaurants & hotels (-36%), transportation & storage (-6.3%); government services (-
2.9%); financial services (-1.6%) and real estate & business activities (-0.4%).
Meanwhile, growth was recorded in manufacturing (4.8%); social & personal services
(1.3%) and construction (0.3%). On the other hand, the oil sector grew 1.8%, driven by
a 12.5% increase in gas production. On a quarterly basis, the GDP fell 2.2%, the most
since 2011, compared to a 1.4% rise in the previous period.
GDP from Construction in Bahrain slightly decreased to US$ 624 million in the first
quarter of 2020 from US$ 631 million in the fourth quarter of 2019. In the long-term, the
Bahrain GDP from Construction is projected to trend around US$ 660 million in 2021
and US$ 676 million in 2022.

Bahrain Market Review Page 1 of 2

The economy will contract sharply in 2020 and Bahrain will struggle financially owing to
the impact of Covid-19 on global demand and slumping oil prices. Growth will pick up in
2021-24, owing to stronger global demand.
In order to help stabilize the economy, the Government of Bahrain has recently
announced a US$ 11.4 billion stimulus package to mitigate the economic impact of
Covid-19 for both individuals and businesses, which includes;
 Increasing the Central Bank of Bahrain's loan facilities to US$ 9.8 billion to allow
the deferment of debt instalments and the extension of additional credit; and
 Redirection of all Tamkeen (the government agency responsible for the
provisions of loans and assistance to businesses) programmes to support
adversely affected businesses and the restructuring of debts issued by Tamkeen.

Bahrain Market Review Page 2 of 2