Bahrain's Wealth: A Rich Country In The Middle East?

Bahrain is a small Arab state located in the Persian Gulf, comprising Bahrain Island and around 30 smaller islands. It is one of the world's chief oil-producing regions, and its economy has long relied on oil and the processing of crude oil from neighbouring countries. Bahrain is generally a wealthy country, but there is a significant gap between the rich and the poor. While wealthy families enjoy the modern amenities of Bahrain's cities, the poor live in villages just a short drive away. The country's wealth is heavily concentrated among the Sunni Muslim ruling elite, with Shiites forming the poorest segment of Bahraini society. Despite its wealth, Bahrain has been working to diversify its economy away from oil due to limited reserves and falling prices.

Bahrain's economy is heavily dependent on oil and gas

Bahrain is a wealthy country in the Middle East and North Africa (MENA) region. Its economy is heavily dependent on oil and gas, with petroleum being the country's most exported product. This reliance on oil and gas is evident in the country's budget revenues, where, despite efforts to diversify, oil still accounts for 85% of Bahraini budget revenues.

The Bahrain Petroleum Company (BAPCO), the national oil company, plays a significant role in the country's oil industry. BAPCO was established in 1929 in Canada by the Standard Oil Company of California for oil exploration in Bahrain. In 1931, BAPCO discovered oil, and the following year, it discovered the Bahrain Field (Awali Field). BAPCO's refinery has a capacity of about 250,000 barrels (40,000 m³) per day, and it exports 95% of its products.

While Bahrain's petroleum industry has not reached the same level of production or profitability as its neighbours, Saudi Arabia and the United Arab Emirates, its central location gives it a strategic advantage in oil transit and foreign relations. Bahrain's limited oil reserves have prompted the country to diversify its economy. Since the late 20th century, Bahrain has invested heavily in the banking and tourism sectors, with the country's finance industry being very successful.

Bahrain's banking and financial services, particularly Islamic banking, have benefited from the regional boom driven by the demand for oil. Additionally, the country has become a regional financial and business centre, with a successful international airport and port, further enhancing its economic position. Bahrain's other significant exported products include aluminium, finance, and construction materials.

The country has a high income economy

Bahrain is a small Arab state located in a bay on the southwestern coast of the Persian Gulf. It is an archipelago consisting of Bahrain Island and around 30 smaller islands. The country's wealth is largely dependent on its oil and gas industry, with petroleum accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Bahrain's finance industry is also very successful, with the country being named the world's fastest-growing financial centre in 2008. Bahrain's banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by the demand for oil.

The country's capital, Manama, is home to many large financial institutions and has a modern, cosmopolitan feel. Bahrain's finance industry is so successful that it was named the world's fastest-growing financial centre by the City of London's Global Financial Centres Index in 2008. Bahrain's success in this sector is due in part to its strong regulatory framework, which has attracted many international financial institutions.

In addition to its oil wealth and successful financial sector, Bahrain has also invested in other industries to diversify its economy. These include heavy industries, retail, and tourism. Bahrain's tourism sector, in particular, has benefited from increasing freedoms and decreasing human rights violations, making it an attractive destination in the region. Bahrain's strategic location in one of the world's chief oil-producing regions has also contributed to its high-income economy, as it provides a central location for oil transit.

Bahrain's high-income economy is further evidenced by its successful diversification initiatives, which led to a 36% growth in GDP per capita in the 1990s. The country has also been recognised by the World Bank as a high-income economy, and according to the 2020 Index of Economic Freedom, it is the 40th-freest economy in the world. Bahrain's gross international reserves increased substantially in 2004, and the country has the second-highest-valued currency unit in the world.

The Bahraini Dinar is the world's second-highest-valued currency

Bahrain is a wealthy island nation in the Persian Gulf, next to Saudi Arabia. Its primary source of income is the oil and gas industry, which accounts for 60% of export receipts, 70% of government revenues, and 11% of GDP. Bahrain's finance industry is also very successful, with the country being named the world's fastest-growing financial centre in 2008.

The Bahraini dinar (BHD) is the official currency of Bahrain and has been since 1965 when it replaced the Gulf rupee. The Bahraini dinar is the second-highest valued currency in the world after the Kuwaiti dinar. As of December 2021, 1 BHD was worth 2.65 USD, while 1 KWD was worth 3.32 USD. The Bahraini dinar is divided into 1000 fils and is often represented with three decimal places denoting the fils. The name "dinar" comes from the Roman denarius, the original standard silver coin used as currency during Roman times from 211 BC for about five hundred years.

The BHD is pegged to the US dollar at a rate of 1 BHD = 2.659 USD. This means that the exchange rate between the two currencies is fixed and will not fluctuate. The Bahraini dinar entered circulation in 1965 and was initially pegged to the British pound before being re-pegged to an undisclosed basket of currencies. The Central Bank of Bahrain manages the currency and began circulating notes with enhanced security features in 2016.

Bahrain's economy is heavily dependent on oil and gas, with petroleum being its most exported product. However, the country has diversified its economy to some extent, with aluminium being the second most exported product, followed by finance and construction materials. Bahrain has also invested heavily in the banking and tourism sectors, with the country's capital, Manama, being home to many large financial institutions.

Bahrain has a large immigrant population

Bahrain is a wealthy country, recognised by the World Bank as a high-income economy. Its economy is heavily dependent on oil and gas, with petroleum accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Bahrain has the second-highest-valued currency unit in the world and has successfully diversified its economy into banking, heavy industries, retail, and tourism.

The presence of a large immigrant population in Bahrain is due to several factors. Firstly, Bahrain's economy, particularly in sectors like banking and tourism, has attracted foreign workers. Secondly, the country's proximity to the Persian Gulf and its role in oil transit give it a strategic advantage and make it a desirable location for those seeking economic opportunities in the region. Finally, Bahrain's increasing freedoms and decreasing human rights violations have made it an attractive destination for immigrants, contributing to the growth of its tourism and services sector.

The ethnic makeup of Bahrain is diverse, with multiple communities coexisting on the islands. The indigenous inhabitants, known as the Baharna, predominantly follow the Shia branch of Islam and constitute the majority of the native Bahraini population. Other ethnic groups include descendants of Africans from East Africa, mainly of the Sunni faith; Lurs, Achomis, and other Shia groups; Sunni Arabs from Persia and native Bahraini Sunni Arabs; and urbanised Sunnis of Bedouin ancestry, such as the Utoob and Dawasir.

The immigrant population in Bahrain brings a range of religious beliefs and practices. While Islam is the predominant religion, with Shia and Sunni Muslims making up 70% of the population, there are also Christians, Jews, Hindus, Baháʼís, and Sikhs. The presence of diverse religious groups contributes to the cultural and social landscape of Bahrain, influencing various aspects of life, including cuisine, traditions, and places of worship.

The country has a rich history

Bahrain is a small Arab state located in a bay on the southwestern coast of the Persian Gulf. It is an archipelago consisting of Bahrain Island and about 30 smaller islands. The name Bahrain is derived from the Arabic term 'al-baḥrayn', meaning 'two seas'.

Bahrain has a rich history that dates back to ancient times. The island of Bahrain is widely believed to be the site of the ancient kingdom of Dilmun, a commercial centre that traded with ancient Sumer. Throughout history, Bahrain has been settled and colonized by various groups, including the native Arab dynasty, the Khalīfah family (Āl Khalīfah), which has ruled Bahrain since the late 18th century.

The Khalifa family came into power in the late 1700s when they ousted the Persians and secured their claims with the help of the United Kingdom. Recognizing the islands' strategic importance, the Khalifa family opened Bahrain's port facilities to foreign naval fleets, including those of the United States. This strategic location has given Bahrain a significant advantage in foreign relations.

Bahrain has a long history of being an important hub for trade and natural resources in the surrounding area. The country has been renowned for its verdant groves of date palms, and its fertile land has made it a prominent harbour and trading centre in the Persian Gulf. Bahrain's capital, Manama, is a strikingly modern and cosmopolitan city, attracting many visitors from neighbouring countries.

In 1932, oil was discovered in the Persian Gulf off Bahrain's shores, and while its petroleum industry has not reached the same level as some of its neighbouring countries, it remains a crucial source of revenue for the nation. Bahrain has also diversified its economy, with growing sectors in banking, tourism, and aluminium production.

Frequently asked questions