Countries in the region have been urged to follow Bahrain’s footsteps in diversifying their economies.

UK-based economist Scott Corfe, who is the economic adviser for the Institute of Chartered Accountants in England and Wales (ICAEW), said plans to axe subsidies on food and power in Bahrain was key to surviving the aftermath of lower oil prices, but added more action was needed, reported the Gulf Daily News (GDN), our sister publication

‘Many GCC countries are on the right path for diversifying their economies, but with lower oil prices here to stay, more action needs to be taken,’ said Mr Corfe, who is also the associate director of Centre for Economics and Business Research (Cebr).

‘The situation can be conducive for implementing much-needed subsidy reforms in a range of countries.

‘We expect more countries will follow in Bahrain’s footsteps, which recently cut fuel, utility and food subsidies for expatriates.’

Corfe was speaking after the release of Cebr’s annual report ‘Economic Insight: Middle East Q2 2015’, which stated that Bahrain’s economic growth was expected to slow down this year.

‘Despite a slight boost after hosting the Formula One Grand Prix in April, Bahrain’s economic growth in 2015 as a whole is expected to slow to 2.7%, down from 4% last year,’ read the report.

However, leading Bahraini economists dismissed the expected decline in economic growth as unsubstantial.

Jafcon Consultants chief executive Dr Akbar Jaffari said the report mentioned a clear growth in tourism, which contradicted the final findings.

According to the report, Bahrain saw international tourist arrivals rise by 14% in 2013, with tourism revenue standing at close to 6% of GDP, the highest of GCC economies.

‘The overall outlook might be murky at the moment with the uncertainty on oil prices, but the analysis that Bahrain slowing down its economic growth pace is not based on proper analysis,’ Dr Jaffari told the GDN.

‘The figures used are from international organisations, which are mostly academic.

‘Analysts should be informed of the nitty-gritty of the global, regional and national economy, apart from a sector-based assessment.’

He said the pace of economic growth would vary periodically depending on different variables.

‘We need to look at the advanced trend ‘economic propensity’, which in Bahrain is better than many other countries in the region, if not all,’ he explained.

‘Challenges that we face are natural and not unique to our nation.’

Bahrain Chamber of Commerce and Industry (BCCI) small and medium enterprises committee vice-chairman Hamed Fakhro said, despite agreeing with many of the report’s conclusions, in the past the centre’s economic predictions have been incorrect.

‘These reports are not always correct and looking at two years ago many of the predictions have been wrong ‘“ so these are not conclusive,’ he said.

‘The fact is that all Arab and GCC countries are peeling off their subsidies is nothing unique to us ‘“ the lowering oil price justifies this, which is in a way crippling our economies.’

The report discussed fiscal, environmental and resource sustainability, with a particular focus on how the various economies in the Middle East were adjusting to lower oil revenues.

The GDN reported on Bahrain’s plans to reduce subsidies for its expatriate population, redirecting subsidies on fuel, electricity, water and meat with cash payments to Bahraini nationals.

The move that was rejected by both parliament and the Shura Council and which resulted in a delay in approving the national budget, is expected to be discussed in detail today by legislators.

Source: Trade Arabia