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Economy

According to a January 2006 report by the United Nations Economic and Social Commission for Western Asia, Bahrain has the fastest-growing economy in the Arab world. Bahrain also has the freest economy in the Middle East and is twelfth-freest overall in the world based on the 2011 Index of Economic Freedom, published by The Heritage Foundation and The Wall Street Journal.

In 2008, Bahrain was named the world's fastest-growing financial centre by the City of London's Global Financial Centres Index. Bahrain's banking and financial services sector, particularly Islamic banking, have benefited from the regional boom driven by demand for oil. Petroleum production and processing is Bahrain's most exported product, accounting for 60% of export receipts, 70% of government revenues, and 11% of GDP. Aluminium production is the second-most exported product, followed by finance and construction materials.

Economic conditions have fluctuated with the changing price of oil since 1985, for example during and following the Persian Gulf crisis of 1990–91. With its highly developed communication and transport facilities, Bahrain is home to a number of multinational firms and construction proceeds on several major industrial projects. A large share of exports consists of petroleum products made from imported crude oil, which accounted for 51% of the country's imports in 2007. In October 2008, the Bahraini government introduced a long-term economic vision for Bahrain known as 'Vision 2030' which aims to transform Bahrain into a diversified and sustainable economy.

In recent years, the government has undertaken several economic reforms in order to improve its financial dependency and also to boost its image as an island tourist destination that is compact, has short travel times and provides a much more authentic Arab experience than the regional economic and tourism powerhouse of Dubai. The Avenues is one such example of the recent developments. It is a waterfront facing shopping mall that was opened in October 2019. Bahrain depends heavily on food imports to feed its growing population; it relies heavily on meat imports from Australia and also imports 75% of its total fruit consumption needs.

Since only 2.9% of the country's land is arable, agriculture contributes to 0.5% of Bahrain's GDP. In 2004, Bahrain signed the Bahrain–US Free Trade Agreement, which will reduce certain trade barriers between the two nations. In 2011, due to the combination of the Great Recession and the 2011 Bahraini uprising, its GDP growth rate decreased to 1.3%, which was the lowest growth rate since 1994. The country's public debt in 2020 is $44.5 billion, or 130% of GDP. It is expected to rise to 155 per cent of GDP in 2026, according to IMF estimates. The military expenditure is the main reason for this increase in debt.

Access to biocapacity in Bahrain is much lower than the world average. In 2016, Bahrain had 0.52 global hectares of biocapacity per person within its territory, much less than the world average of 1.6 global hectares per person.

In 2016, Bahrain used 8.6 global hectares of biocapacity per person – their ecological footprint of consumption. This means they use 16.5 times as much biocapacity as Bahrain contains. As a result, Bahrain is running a biocapacity deficit.

Unemployment, especially among the young, and the depletion of both oil and underground water resources are major long-term economic problems. In 2008, the jobless figure was at 4%, with women overrepresented at 85% of the total. In 2007 Bahrain became the first Arab country to institute unemployment benefits as part of a series of labour reforms instigated under Minister of Labour, Majeed Al Alawi.

As of Q4 2022, total employment in Bahrain stood at 746,145 workers. This included both Bahraini and Non-Bahraini workers. These employment levels represented a full recovery of employment since the downturn caused by the COVID pandemic.