Bahrain - Country Commercial Guide
Market Overview

Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.

Last published date: 2021-09-28

Bahrain is considered one of the most open economies in the Middle East and North Africa (MENA) region.  With several free trade agreements, excellent infrastructure, and strong financial institutions, Bahrain is well positioned to provide traders and investors access to regional and international markets.

Bahrain is only one of two Gulf Cooperation Council (GCC) member countries to have a Free Trade Agreement (FTA) with the United States.  In most sectors, Bahrain permits 100 percent foreign-ownership of a business or branch office, without the need for a local partner, and has no tax on corporate income, personal income, wealth, capital gains, withholding, or death/inheritance.  Bahrain has no restrictions on repatriation of capital, profits or dividends.

The Heritage Foundation ranked Bahrain as the world’s 40th freest economy in its 2021 Index of Economic Freedom, behind only Qatar and the UAE among GCC member states.  Bahrain’s overall score in the 2021 index increased by 3.6 points from 2020 thanks to improvements in judicial effectiveness.

After previoulsy ranking 62nd in 2019, Bahrain strengthend business climate conditions and improved to 43rd out of 190 countries in the World Bank’s “Doing Busines 2020” report.  The World Bank recognized Bahrain as one of the top 10 most improved economies after implementing the highest number of regulartory reforms, improving in almost every area measured by the Doing Business report.

Many U.S. businesses have done well in Bahrain and are dominant in major sectors such as oil and gas, engineering, and information and communications technology (ICT).

On the heels of the global COVID-19 pandemic, Bahrain’s real gross domestic product (GDP) contracted by 5.8 percent in 2020 while nominal GDP dropped by 10.2 percent for the same year.  2020 marked negative real GDP growth rates in both the oil and the non-oil sectors of 2.2 percent and 1.7 percent, respectively.

InterNations, a global network of people living and working overseas, ranked Bahrain as the 23rd most favorable destination for expatriates worldwide in 2020, dropping from seventh place overall in 2019.  In the survey, Bahrain ranked first among GCC counterparts across several categories, including quality of family life and the cost of living.