Bahrain’s non-oil economy grew 2.2% in the first quarter of 2026 compared with the same period last year, despite a decline in the country’s overall gross domestic product due to regional disruptions, according to official data.
A quarterly report by the Ministry of Finance and National Economy showed that real GDP fell 3.8% year over year. The decline was mainly caused by a 37.2% drop in oil-related activities due to restrictions on maritime traffic through the Strait of Hormuz and scheduled maintenance, the Bahrain News Agency reported.
Despite this, the non-oil sector remained strong and accounted for 90.1% of real GDP. Nine of the 13 non-oil sectors recorded positive growth.
The report said the national economy performed strongly during January and February 2026. It also noted that average wages for Bahraini workers in both the public and private sectors reached their highest levels ever, supported by record growth in average monthly wages in the private sector.
Ashraf I. Jarrar, an international broker and asset management professional at United Securities, told Arab News that the figures show an important difference between a temporary external shock and the underlying strength of the economy.
He said the continued growth of the non-oil economy during a period of regional disruption was a strong sign of economic resilience. He added that Bahrain’s diversification is not only about reducing the share of oil in GDP but also about creating a competitive business environment that can continue generating economic activity despite external pressures.
Financial and insurance activities, the largest contributor to GDP at 19.7%, recorded the highest annual growth among non-oil sectors, at 8.6%. Manufacturing accounted for 14.6% of GDP, followed by public administration at 9% and construction at 7%.
Foreign direct investment stock also increased 2.6% year over year by the end of the first quarter, reaching 17.6 billion Bahraini dinars ($46.7 billion), according to the ministry.
Jarrar said investor confidence appeared to have remained strong, pointing to the 2.6% increase in inward foreign direct investment during the quarter. He said that, together with the strong performance of the non-oil sector, the figures provide an encouraging picture of Bahrain’s economic progress.
Bahrain also entered the world’s top 20 most competitive economies for the first time in 2026, ranking 20th among 70 economies in the IMD World Competitiveness Yearbook. The country has climbed from 30th place in 2022 and also ranked third globally for price stability in the 2026 edition.
The International Monetary Fund expects Bahrain’s real GDP to contract 0.5% in 2026 before rebounding to 4.5% growth in 2027.
