Bahrain’s and Oman’s economies will grow less than previously forecast this year as uprisings in the two Persian Gulf states take a toll on industries such as financial services and tourism.
Bahrain’s real gross domestic product will expand 1.4 percent, down from a previous forecast of 4.3 percent, Barclays Capital senior economist Alia Moubayed said in an e-mailed report today. Oman’s economic growth was downgraded to 4.5 percent from 5.2 percent, the report said.
The forecast bears a “risk to the downside should the situation in Bahrain deteriorate further,” the report said. In countries where “severe unrest occurred, primarily in Bahrain and to a lesser extent in Oman, non-hydrocarbon growth is likely to slow despite the expected increase in government spending and support from neighboring GCC states.”
Protesters in Oman and Bahrain are demanding free elections and more housing and jobs, echoing uprisings that have swept the region this year and unseated rulers in Tunisia and Egypt. At least two people have died in clashes between demonstrators and security forces in Oman, while seven people have been killed in Bahrain.
The unrest sent the Bloomberg GCC 200 Index of Gulf shares down 2.8 percent this year, while oil prices rose almost 19 percent. The six countries of the Gulf Cooperation Council, which include Bahrain and Oman, are home to 20 percent of the world’s oil supply.
The GCC states said March 10 that they would provide Oman and Bahrain with $10 billion each over a decade for the development of infrastructure and housing.
The aid package “is likely to put a floor to any potential deterioration in Bahrain’s outlook and bridge any imminent financing needs that may arise,” the report said.