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  Bahrain’s cautious economic evolution

  5 November 2025

  

   

  Bahrain’s economic outlook is currently defined by a steady but cautious sense of forward motion. The country has succeeded in maintaining growth driven almost entirely by the non-oil economy, while its reliance on hydrocarbons, though diminished, still shapes the fiscal landscape.

  Public debt remains high and continues to constrain government spending, yet the state has avoided severe austerity and instead adopted a gradual approach to balancing economic reform with social stability.

  Real GDP is expected to expand by 2.9% in 2025 in a slight improvement on the 2.6% growth rate in 2024, according to the IMF, and in an indication that non-oil sectors are gaining traction and that domestic demand and investment are holding up.

  In 2026, growth is projected to rise further to 3.3%, suggesting that the economy is picking up momentum.

  There have also been positive signs in foreign direct investment (FDI). In the second quarter of 2025, FDI inflows rose by 5.4%, according to the Ministry of Finance, led by the financial and insurance services sectors.

  At the same time, the kingdom’s national debt – as a consequence of its persisting fiscal deficit – now stands at around 140% of GDP and weighs heavily on public finances.

  Efforts at fiscal consolidation, such as subsidy reforms and spending controls, have been gradual, reflecting the government’s cautious approach to balancing fiscal responsibility with investment. Still, the underlying pressures are significant, and the cracks in Bahrain’s fiscal sustainability will remain a key risk factor for the foreseeable future.

  Non-oil expansion

  Looking closer at recent growth, the economy expanded by 2.5% year-on-year in the second quarter of 2025, driven largely by a 3.5% surge in non-oil activity.

  The non-oil sector is now responsible for over 80% of GDP and has become the main engine of growth, led by the finance, trade, real estate and hospitality sectors. Pro-business reforms and foreign investment incentives have supported this.

  Financial services remain at the centre of Bahrain’s non-oil transition, with the country having long positioned itself as a regional banking and finance hub. In recent years, its regulatory openness and fintech-friendly environment, including in emerging spaces such as crypto, have become increasingly defining competitive advantages.

  Flexible licensing, direct regulatory engagement and support from initiatives such as Bahrain FinTech Bay and the Central Bank of Bahrain's regulatory sandbox framework have all bolstered the country’s competitiveness – and the result has been an uptick in fintech, investment management and digital banking activity.

  Tourism, too, has evolved into a structural contributor to national growth. Rather than attempting to compete with the scale and spectacle of Dubai or Doha, Manama has focused on cultivating a hospitality sector geared towards short-stay travel, weekend tourism within the Gulf, business events and cultural programming.

  The opening of new hotels and entertainment venues, combined with the resumption of Gulf Air’s direct route to the US, has reinforced Bahrain’s strategic push to widen its global connectivity.

  Manufacturing and logistics continue to play an important role, anchored by its Alba-led aluminium production and supported by Bahrain’s advantageous trade relationships, particularly its free trade agreement with the US.

  While not the flashiest component of the economy, this industrial base provides resilience and employment diversity that helps counterbalance the more volatile elements of its service-sector expansion.

  Real estate and regulation

  The real estate and construction sector has grown in response to these economic shifts, but in a measured and demand-driven way. Unlike the rapid speculative development cycles observed elsewhere in the Gulf, Bahrain’s residential market has expanded moderately, with consistent demand coming primarily from middle-income Bahraini nationals and supported by subsidised housing and mortgage assistance programmes.

  High-end residential developments exist but are not oversaturated, and the market overall has avoided the sharp imbalances seen in larger regional economies.

  Large waterfront and mixed-use developments, such as Bahrain Bay and Marassi Al-Bahrain, outline the government’s focus on sustainable urban liveability and integrated community design – a key theme of the government’s 2023-26 national plan – rather than architectural statements.

  Public infrastructure spending and hospitality expansion continue to sustain construction activity, though rising material and labour costs remain a concern. Commercial real estate is also stabilising after a period of oversupply, with new demand emerging from expanding financial and professional services firms.

  From a regulatory perspective, the real estate sector has also been undergoing gradual liberalisation, especially in relation to foreign property ownership. While Bahrain has long allowed foreign nationals to own property in designated freehold zones, recent reforms have focused on expanding these zones as well as simplifying regulatory procedures and linking property ownership more directly to residency and long-term investment incentives.

  The regulatory adjustments have also made it easier for foreign investors to own commercial office and retail space.

  Taken together, these trends show a country reshaping its economic identity through deliberate adaptation rather than dramatic reinvention. Bahrain is not pursuing the hyper-scaled transformation seen in Saudi Arabia or the branding-driven global city strategy of Dubai.

  Instead, it is cultivating a model grounded in regulatory agility, human capital development, manageable growth and incremental diversification.

  At the same time, high debt levels and a narrowing fiscal space continue to pose risks to long-term stability and weigh on the kingdom’s economic trajectory.

  Yet for now, the kingdom’s recent progress is something to be celebrated, even as its vulnerabilities are equally real.

  Sustaining momentum will require continued investor confidence, tighter fiscal management and progress toward addressing longstanding social and political pressures, particularly those affecting youth employment and public trust.

  The question is whether its governance, fiscal policy and social framework can continue to evolve at a pace that matches the economic transformation already under way.

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  MEED's December special report on Bahrain also includes:

  > BANKING: Mergers loom over Bahrain’s banking system
  > OIL & GAS: Bahrain remains in pursuit of hydrocarbon resources
  > CONSTRUCTION: Bahrain construction faces major slowdown

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  John Bambridge
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  Bahrain construction faces major slowdown

  5 November 2025

  

   

  Bahrain’s construction and transport sector has struggled to stay afloat in recent years, with the total value of awarded contracts falling for the third consecutive year.

  According to regional projects tracker MEED Projects, only about $400m-worth of contracts had been awarded in Bahrain by the end of October – less than half the $1.2bn recorded during the same period last year.

  The sector has yet to return to its pre-pandemic levels. Before 2020, Bahrain consistently awarded more than $2bn in contracts annually, peaking at nearly $4bn in 2016, when the contract to build a new terminal at Bahrain International airport was awarded.

  Contract awards

  The largest contract award this year is an estimated $77m agreement between Bahrain’s Ministry of Works and local construction firm Haji Hassan Group to expand the Budaiya Highway project.

  Another major deal, valued at about $50m, was awarded to local firm Nass Contracting for the second phase of the Muharraq Ring Road.

  All other contracts awarded so far this year have been below the $50m mark. These include a $40m contract awarded to local firm United Marine Trading for the construction of a superyacht marina.

  Other contracts include the $38m Tilal Residential Development awarded to Manama-based Ahmed Omar Group, and a $35m contract awarded to RP Construction for a mixed-use project in the second phase of Edamah’s Saadah development.

  Future prospects

  Several large-scale real estate schemes form the bulk of Bahrain’s $5bn pipeline of upcoming construction projects. These include five reclaimed islands, the largest of which is Fasht Al-Jarim – a 183-square-kilometre mixed-use hub that will host a new airport alongside residential, logistics and tourism zones.

  Tendering is also ongoing for several real estate-related schemes.

  In September, consultants submitted bids for a tender covering contract management and site supervision for 1,269 villas in East Sitra. The project represents the second phase of the East Sitra social housing development.

  In October, firms submitted bids for infrastructure works covering 477 residential plots in Block 589 of Madinat Salman Island 10. The project is being developed by Bahrain’s Ministry of Housing & Urban Planning.

  Bid evaluation has also reached advanced stages for a tender covering the construction of 507 villas in Madinat Al-Hidd – Villages A2 and A3. 

  While the real estate sector is expected to provide much-needed short-term momentum, it is longer-term infrastructure schemes that will underpin sustained growth in Bahrain’s construction and transport market in the coming years.

  Transport projects

  Long-term projects expected to generate market opportunities include the Bahrain Metro scheme, for which the client prequalified several consortiums in 2023 to bid for the main contract.

  Another major infrastructure scheme expected to advance soon is the second causeway linking Bahrain and Saudi Arabia. In 2023, selected construction firms submitted feedback questionnaires and met with the King Fahd Causeway Authority regarding the estimated $3.5bn crossing.

  The project involves constructing a 25-kilometre road-and-rail crossing connecting Saudi Arabia and Bahrain. 

  The second causeway involves building a 25-kilometre road and rail crossing that will link Saudi Arabia and Bahrain. It will follow the same alignment as the existing King Fahd Causeway.

  Progress is also being made on the Qatar-Bahrain causeway project. Last year, Qatar and Bahrain agreed to restructure the board of directors for the estimated $4bn scheme.

  The decision followed a November 2023 meeting between officials from both countries, where they agreed to restart the project.

  The project was put on hold in 2010 and effectively cancelled during the Gulf diplomatic dispute in 2017. The restoration of diplomatic ties between Bahrain and Qatar has revived prospects for the project to move forward.

  The proposed causeway is a key component of the GCC rail network. After years of slow progress, work on the regional rail scheme has recently accelerated, with design activities advancing on several cross-border links.

  In the short term, tendering is expected to begin shortly for the widening and upgrading of the Sheikh Jaber Al-Ahmad Highway project, after US-based Parsons Corporation was awarded a $1.4m contract to provide pre-contract engineering consultancy services.

  The contract for package four of the Busaiteen Link Road scheme is also expected to be finalised soon, after local firm Haji Hassan Group submitted the lowest bid, valued at $277m.

  The package includes the construction of a signature bridge connecting Muharraq to the North Manama Causeway and Bahrain Bay.

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  Yasir Iqbal
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  Dewa invites bids for MBR Solar Park phase seven

  5 November 2025

  Dubai Electricity & Water Authority (Dewa) has invited qualified companies and consortiums to submit proposals for the seventh phase of the Mohammed Bin Rashid Al-Maktoum Solar Park.

  This phase will add 2,000MW from photovoltaic (PV) solar panels and include a 1,400MW battery energy storage system (bess) with a six-hour capacity, providing a total storage capacity of 8,400 megawatt-hours. 

  Dewa completed the prequalification process for the project earlier this year.

  MEED previously reported that 47 firms had submitted their responses to Dewa’s expression of interest request for the contract on 21 March.

  International and regional utility developers; engineering, procurement and construction contractors; and bess suppliers attended an investor roadshow for the project on 9 April, as MEED reported.

  French utility developer Engie; Riyadh-headquartered Acwa Power and Alfanar; and the local Amea Power, Etihad Water & Electricity Company and Abu Dhabi Future Energy Company (Masdar) were among those that attended the roadshow.

  The project is expected to be commissioned in phases, starting in August 2027.

  A transaction advisory team for the project has been in place since January. It comprises UK-headquartered Deloitte and US-based CMS and Sargent & Lundy as financial, legal and technical advisers, with Deloitte acting as lead adviser. 

  In February last year, Dewa and Masdar reached financial close for the 1,800MW sixth phase of the MBR Solar Park, which is expected to cost up to AED5.5bn ($1.5bn).

  Once completed in 2026, the sixth phase will increase the solar park’s total production capacity to 4,660MW.

  Dewa recently increased its flagship solar project's 2030 installed capacity target by 45%, from 5,000MW to 7,260MW.

  The state utility said MBR Solar Park will have a production capacity of more than 7,260MW by 2030, with a total investment of AED50bn ($13.6bn).

  According to Dewa, the total capacity of the solar energy projects commissioned at the solar park has reached 3,460MW from PV solar panels and concentrated solar power.

  Based on this figure, clean energy accounts for 20% of Dewa's total power capacity of about 17,179MW as of early 2025. Natural gas-fired capacity accounts for the rest.

  The Dubai Clean Energy Strategy 2050 and the Dubai Net-Zero Carbon Emissions Strategy 2050 aim to provide 100% of Dubai's energy production capacity from clean energy sources by 2050.

  ---

  READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

  Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

  Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:

  > AGENDA 1: Gulf LNG sector enters a new prolific phase > AGENDA 2:  Mena LNG infrastructure spending rises > INDUSTRY REPORT 1: Region sees evolving project finance demand > INDUSTRY REPORT 2: Iraq leads non-GCC project finance activity > PPPs: NCP showcases private sector project opportunities in Saudi Arabia > GREEN STEEL: Abu Dhabi takes the lead in green steel transition > DIGITISATION: Riyadh-based organisation drives digital growth > LEADERSHIP: Saudi Arabia’s housing boom risks leaving citizens behind  > UAE MARKET FOCUS: Investment shapes UAE growth story

  To see previous issues of MEED Business Review, please click here

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  Mark Dowdall
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  Bahrain remains in pursuit of hydrocarbon resources

  5 November 2025

  

   

  Bahrain, which holds relatively modest hydrocarbon reserves compared with its Gulf peers, has been consistently seeking additional resources to boost its oil and gas production.

  The country made a major step towards this goal in 2018, announcing the discovery of the Khalij Al-Bahrain offshore hydrocarbons basin, estimated to contain 80 billion barrels of oil and 10-20 trillion cubic feet of gas. Nearly seven years later, however, Manama is not known to have made any notable progress in commercially appraising that resource base.

  The state-owned enterprise Bapco Energies has therefore devised a multi-pronged strategy to secure Bahrain’s energy future. Its first objective, according to group CEO Mark Thomas, is to maintain current oil and gas output levels.

  “Objective number one is to stabilise oil and gas production from the existing reservoirs at the Awali field and stem the decline. These are very mature reservoirs, which, without intervention, will decline quite quickly,” Thomas told MEED in an interview earlier this year.

  Bahrain’s primary oil and gas production comes from the Awali field, where the Gulf’s first oil discovery was made in 1932. Bapco Upstream, a subsidiary of Bapco Energies, is the sole operator of this onshore field, also known as the Bahrain field. The field produces an average of 42,400 barrels a day (b/d) of crude oil and 1.67 billion cubic feet a day of non-associated gas.

  In addition, Bapco Energies draws in about half of the 300,000 b/d output from the Abu Safah offshore field, which Bahrain shares with Saudi Arabia.

  “Objective number two is to develop new opportunities,” Thomas said, adding: “We’ve been looking at appraising pre-Unayzah gas from the Al-Jawf and Al-Juba reservoirs,” which Bapco Energies announced discovering in 2022.

  “These are deep gas reservoirs, so we call them unconventional. They’re tight rock, need to be fracked and require the drilling of horizontal wells for production. We’ve gone through an appraisal programme on that. We’ll start a development programme in 2025 around those [discoveries],” Thomas said at the time.

  Exploration campaign

  In March, Bapco Energies announced an agreement with US-based EOG Resources to “evaluate a promising gas exploration prospect” in the country, without specifying its location.

  Later in the year, Bahrain’s Oil & Environment Ministry signed a concession agreement with Bapco Energies and EOG Resources to explore potential hydrocarbon resources.

  Under the contract, EOG Resources Bahrain Awali – the company’s local subsidiary – will work with Bapco Energies to explore, appraise and develop oil and gas reserves in Bahrain. Bapco Energies has not disclosed the nature, terms or scope of activities under the concession agreement.

  Thomas had told MEED that Bapco Energies was advancing a “large three-dimensional (3D) seismic programme” to search for offshore hydrocarbon resources. 

  “We’re running an extensive campaign covering about 4,500 square kilometres of surface area, where we will be shooting 3D seismic. That is basically around the entirety of [Bahrain]. We will carry on through 2025 and into 2026.

  “We hope to be able to identify some structures and then invite companies to come, share the information with them and hopefully do some exploration drilling,” he added. 

  “It’s logical that there will be [a licensing round in the future], assuming that we are successful with the 3D seismic and can identify some structures. But it needs to wait until we have some quality data. 

  “This has always been the hindrance for us in attracting international oil companies to come to Bahrain,” he noted. “The quality of the data that we had for offshore was not good and, quite frankly, for a company entering a new country, the risk was too high.”

  Italian energy producer Eni has been the only international company evaluating exploration and production opportunities in Bahrain in recent years.

  “By using the latest technology with 3D seismic seabed nodes, and by shooting deeper, we will absolutely have the best data that we can. And, if there are structures offshore, we will definitely find them,” Thomas told MEED.

  Despite an oil production capacity of only about 205,000 b/d, Bahrain holds a key seat in the Opec+ coalition. Bapco Energies aims to maintain, if not increase, its oil and gas production levels through capital expenditure on projects.

  Main image: View of Bahrain's first oil well at the country's Oil Museum

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  Indrajit Sen
• 
  Dubai tenders $16bn of sewerage tunnel contracts

  5 November 2025

  

   

  Dubai Municipality has opened bidding for its J and W packages under the Dubai Strategic Sewerage Tunnels (DSST) public-private partnership (PPP) project.

  The DSST scheme is one of Dubai’s largest planned infrastructure PPPs, with an estimated total cost of about AED80bn ($22bn).

  It will be developed under three packages: J, W and Links.

  The bid submission deadline for packages J and W is 3 December, a source confirmed to MEED. 

  The tender was issued by the municipality's sewerage and recycled water projects department.

  The three packages cover construction works that were previously categorised under the Warsan Strategic Tunnel Scheme (Package W) and the Jebel Ali Strategic Sewerage Scheme (J1 North, J2 South, J3 Jebel Ali Links).

  These packages have now been restructured and renamed.

  The project masterplan covers the construction of two sets of deep tunnels terminating at terminal pump stations at Warsan and Jebel Ali Sewage Treatment Plants (STPs). It also includes 200 kilometres of sewer links.

  MEED understands that three consortiums are preparing bids for the J and W packages. These include:

  • Plenary Group (Australia) / Itochu (Japan) / Infrastructure Holding (UAE) 
  • Vision Invest (Saudi Arabia) / Suez Water Company (France)
  • Etihad Water & Electricity (UAE) / Tamasuk Holding (Saudi Arabia) / Alkhorayef Water & Power (Saudi Arabia)

  The DSST project aims to convert Dubai’s sewerage system from a pumped network to a gravity-based system, enabling the emirate to replace existing sewage pumping stations and meet long-term capacity needs.

  The three packages are being procured under 30-year design, build, finance, operate and maintain concession models.

  MEED understands that, as part of the bidding process, consortiums are finalising details with partners who would operate the project.

  The third Links package, meanwhile, will be tendered next year. This is valued at approximately $5bn.

  The municipality previously launched a refresher request for qualifications in September for developers that had originally been shortlisted under the first prequalification process. 

  The DSST programme also marks the first time the municipality will use ICV (In-Country Value), a local content programme that promotes economic benefits.

  ---

  READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

  Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

  Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:

  > AGENDA 1: Gulf LNG sector enters a new prolific phase > AGENDA 2:  Mena LNG infrastructure spending rises > INDUSTRY REPORT 1: Region sees evolving project finance demand > INDUSTRY REPORT 2: Iraq leads non-GCC project finance activity > PPPs: NCP showcases private sector project opportunities in Saudi Arabia > GREEN STEEL: Abu Dhabi takes the lead in green steel transition > DIGITISATION: Riyadh-based organisation drives digital growth > LEADERSHIP: Saudi Arabia’s housing boom risks leaving citizens behind  > UAE MARKET FOCUS: Investment shapes UAE growth story

  To see previous issues of MEED Business Review, please click here

  https://image.digitalinsightresearch.in/uploads/NewsArticle/15023684/main.jpg

  Mark Dowdall