Bahrain construction output expected to grow at 2.1% in 2021

GlobalData report predicts that Kingdom’s construction industry will growth at an average rate of 4.3% between 2022 and 2025

Bahrain’s construction output contracted by an estimated 0.2% in real terms in 2020, as the industry faced disruptions due to the COVID-19 pandemic and movement restrictions to prevent its spread, a report from GlobalData has found.

The drop in oil prices has further compounded the problems facing Bahrain’s construction industry, as the Kingdom is heavily dependent on oil revenue, the report adds. However, it points out that investments in infrastructure, oil and gas, and renewables is expected to drive a recovery for the industry in 2021, with an expected real growth rate of 2.1%.

Furthermore, the report reveals that the Kingdom’s construction industry is expected to grow at an average rate of 4.3% between 2022 and 2025. This will be supported by investments on the development of the country’s overall infrastructure in line with its economic vision 2030.

“Despite economic diversification efforts, hydrocarbons still account for more than 70% of fiscal revenue and, as a result, the public finances are vulnerable to oil price volatility. The IMF’s forecast of a rise in oil prices by 21% in 2021 offers respite to Bahrain’s Government as it would facilitate further investments in the industries, energy and utilities and infrastructure sector, which would help in the government’s diversification efforts,” says Dhananjay Sharma, analyst at GlobalData.

Projects in Bahrain, as tracked by GlobalData, have a combined value of US$80.2bn. The pipeline, which includes all projects from pre-planning to execution with a value above US$25m, is skewed towards late-stage projects, with projects in the execution stage accounting for 63.1% of the pipeline’s value as of January 2021.

“Residential and mixed-development projects account for the largest proportion of the project pipeline, with a share of 39% of the total project pipeline. This reflects the enormous potential in the residential sector, which has so far been mostly driven by government investments. The government’s efforts at attracting private players as well as foreign investments will boost growth in this sector over the forecast period,” Sharma concludes.


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