Bahrain Q1 GDP Contracts 3.8% on Sharp Oil Sector Slump

Bahrain’s economy contracted by 3.8% year-on-year in Q1 2026, reversing a 4.6% expansion in the previous quarter, according to preliminary data. This marked the first contraction since Q1 2021 and the steepest decline since Q3 2020, weighed down by a 37.2% plunge in oil activities, primarily due to restrictions imposed on maritime traffic through the Strait of Hormuz, which affected export capacity. Meanwhile, the non-oil sector grew by 2.2% (7.4% in Q4), contributing 90.1% to GDP, with nine out of 13 sectors recording positive growth. Among non-oil activities, financial and insurance services remained the largest contributor to GDP, accounting for 19.7%, and grew 8.6%, followed by manufacturing at 14.6%, public administration at 9.0%, and construction at 7.0%. Last year, the economy grew by 3.5%, supported by a 4.1% expansion in non-oil activities, while oil activities shrank slightly by 0.3%. The growth was faster than the government’s projection of 3.1%.

Bahrain’s economy advanced by 4.6% year-on-year in Q4 2025, accelerating from a 4.0% expansion in the previous quarter, according to preliminary data. This marked the fastest growth since Q2 2022, driven by robust growth in the non-oil sector (7.4% vs 3.1% in Q3). By contrast, oil activities contracted by 12.3%, after growing 9.3% in Q3. Across most economic sectors, growth strengthened, notably in financial and insurance activities (5.6% vs 5.0%), followed by construction (5.0% vs 4.4%), transportation and storage (4.7% vs 4.4%), and wholesale and retail trade (4.2% vs 3.3%). Meanwhile, output growth eased for real estate (4.3% vs 5.4% in Q3), education (4.0% vs 4.8%), and manufacturing (3.7% vs 3.9%). For the full year of 2025, the economy grew by 3.5%, supported by a 4.1% expansion in non-oil activities, while oil activities shrank slightly by 0.3%. The growth was faster than the government’s projection of 3.1%. On a quarterly basis, the GDP grew by 7.8%

Bahrain’s economy expanded by 4.0% year-on-year in Q3 2025, accelerating from a 2.5% growth in the previous quarter, preliminary data showed. This marked the fastest growth since Q4 2023, driven by sustained growth in the non-oil sector (3.1% vs 3.5% in Q2), and a sharp rebound in oil activities (9.3% vs -2.6%). On economic sectors, growth strengthened across most sectors namely manufacturing (3.9% vs 1.0%), construction (4.4% vs 2.7%), financial and insurance activities (5.0% vs 2.2%), public administration (2.4% vs 1.7%), transportation and storage (4.4% vs 2.6%), education (4.8% vs 2.9%), and real estate (5.4% vs 4.7%). Meanwhile, growth moderated for wholesale and retail trade (3.3% vs 6.7%). In year of 2025, GDP growth is projected at 3.1%, driven by non-oil at 3.1% and oil activities at 3.0%. In 2026, economic growth is forecast to accelerate to 3.3%, boosted by a 3.5% expansion in non-oil activities and a 2.1% increase in oil output. On a quarterly basis, the GDP grew by 2.3%.