Bahrain’s plans to diversify its economy and move away from oil dependence could be derailed by the unrest in the island kingdom, say analysts, raising concerns over the future of its financial industry.
“The events of the last week are a blow to Bahrain’s diversification strategy because it creates a reputational problem in the long run,” said Moritz Kraemer, managing director of sovereign ratings for the Middle East, Europe and Africa for Standard and Poor’s, based in Frankfurt. “Diversification, particularly into the financial sector which is sensitive to shocks, will be a challenge for a country that depends highly on oil, but is not an oil superpower like Saudi Arabia with reserves for many years to come.”
Nearly 80 percent of Bahrain’s government revenue comes from oil and natural gas sales, according to S.&P. research, although Bahrain has only 0.01 percent of the world’s proven oil reserves — compared with 19.8 percent in Saudi Arabia and 7.3 percent in the United Arab Emirates, according to the C.I.A. World Factbook.
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