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In 1783, the Sunni Al-Khalifa family took power in Bahrain. In order to secure these holdings, it entered into a series of treaties with the UK during the 19th century that made Bahrain a British protectorate. The archipelago attained its independence in 1971. A steady decline in oil production and reserves since 1970 prompted Bahrain to take steps to diversify its economy, in the process developing successful petroleum processing and refining, aluminum production, and hospitality and retail sectors, and also to become a leading regional banking center, especially with respect to Islamic finance. Bahrain's small size, central location among Gulf countries, and proximity to Iran require it to play a delicate balancing act in foreign affairs among its larger neighbors.


Middle East, archipelago in the Persian Gulf, east of Saudi Arabia

Natural Resources

oil, associated and nonassociated natural gas, fish, pearls

Population - distribution

smallest population of the Gulf States, but urbanization rate exceeds 90%; largest settlement concentration is found on the far northern end of the island in and around Manamah and Al Muharraq

Arabic (official), English, Farsi, Urdu
MANAMA (capital) 411,000 (2015)
Conventional long form
Kingdom of Bahrain
Conventional short form
Local long form
Mamlakat al Bahrayn
Local short form
Al Bahrayn
constitutional monarchy
Geographic coordinates
26 14 N, 50 34 E
Time difference
UTC+3 (8 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Low oil prices have generated a budget deficit of at least a $4 billion deficit in 2016, nearly 14% of GDP. Bahrain has few options for covering this deficit, with meager foreign assets and a constrained borrowing ability. In the last year the three major US credit agencies downgraded Bahrain’s sovereign debt rating to “junk” status, citing persistently low oil prices and the government’s inability to more effectively cut spending.
External debt stocks
US$ 10,729,125,000
Total tax rate (% of commercial profits)
Real Interest Rate
Manufacturing, value added (% of GDP)
Current Account Balance
US$ 1,123,670,213
Labor Force, Total
Employment in Agriculture
Employment in Industry
Employment in Services
Unemployment Rate
Imports of goods and services
US$ 22,303,191,489
Exports of goods and services
US$ 26,327,127,660
Total Merchandise Trade
FDI, net inflows
US$ -1,462,765,957
Commercial Service Exports
US$ 3,335,106,383
fruit, vegetables; poultry, dairy products; shrimp, fish
petroleum processing and refining, aluminum smelting, iron pelletization, fertilizers, Islamic and offshore banking, insurance, ship repairing, tourism
petroleum and petroleum products, aluminum, textiles
Saudi Arabia 3.5%, UAE 2.3%, US 2.2% (2015)
crude oil, machinery, chemicals
Saudi Arabia 28.9%, US 9.4%, China 7.5%, Japan 6.6%, Australia 5.1%, India 4.9% (2015)
Country Risk Rating
Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable.
Business Climate Rating
The business environment is acceptable. Corporate financial information is sometimes neither readily available nor sufficiently reliable. Debt collection is not always efficient and the institutional framework has shortcomings. Intercompany transactions may thus run into appreciable difficulties in the acceptable but occasionally unstable environments rated A4.
  • Fairly diversified (oil, gas, aluminum, petrochemicals, financial services, tourism) and open economy
  • Presence of the main American naval base in the region (U.S. 5th Fleet)
  • Diminishing hydrocarbon reserves and exposure to their price fluctuation
  • Very acute socio-political tensions between the Sunnite minority in power and the majority Shiite population
  • Uncertain regional geopolitical environment
  • Dependence on foreign labor

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