Bahrain’s economy is registering marked progress on several fronts. This trend is demonstrated via the gains being made in economic diversification, reducing the burden of public finance and enticing new investments. These matters are vital in normal circumstances and much more so in the environment of low oil prices.

A recent article by MEED magazine highlighted aspects of a diversified economy. The piece argued non-oil gross domestic product (GDP) grew by 3.9 per cent in 2015. And the projections for non-oil GDP stand at 3.5 per cent and 3.2 per cent in 2016 and 2017, respectively.

Such contributions should help the economy register real GDP growth of 2.9 per cent in 2016 and 2.7 per cent in 2017. Make no mistake, Bahrain’s economy remains heavily dependent on the petroleum sector, in turn serving as the primary source of budgetary revenues and export earnings. However, the story is somehow different when it comes to contributions of oil to the GDP.

The numbers point out that the oil and gas sector made up 20 per cent of GDP in 2014, down from 44 per cent in 2000. Still, a further fall of the sector could not ruled out against a backdrop of low oil prices. Conversely, the share of the financial services sector grew from 14 per cent to 17 per cent within the same time span.

Nevertheless, caution is required as the processing of crude oil into petroleum products accounted for a major share of the manufacturing sector. Bahrain transfers imported crude oil from Saudi Arabia into a refinery for processing into petroleum products like jet fuel and diesel.

Therefore, the comprehensive role of the petroleum sector is higher than the figures suggest.

Concerning streamlining public finance, the authorities have capitalised on the experience of oil low prices to plead the case for reducing subsidies where possible. The budget for fiscal year 2016 was prepared with a record projected shortfall of $4.1 billion, or 42 per cent of spending.

The government lifted a subsidy for red meat in 2015. In another unpopular move with the public, officials abruptly decided to raise prices for premium quality petrol by 60 per cent to $0.42 per litre.

Other initiatives entail raising prices for utility, especially for businesses and foreign residents. Plans are underway to introduce limited value-added tax (VAT) in 2018 as part of a broader move by Gulf states.

The third positive concerns the generous financial support from the UAE, Kuwait and Saudi Arabia. Over the past few years, the UAE has signed accords to provide economic aid worth $2.4 billion. The package includes providing funding needed for upgrading the Bahrain International Airport at a cost of $1.1 billion.

A good amount of grants go into constructing new homes throughout Bahrain. This is meant to address some of the socioeconomic grievances that led to the events of February 2011. In particular, Kuwait is noted for funding infrastructure projects.

These measures are supplemented by a new-founded drive designed to liberalise the economy. A fresh plan calls for allowing non-locals to own entire stakes in numerous business activities, including recreation and leisure, health and social work, information and communication, manufacturing, mining and quarrying, real estate and water supply.

Needless to say, GCC subjects are treated as locals in business activities.

Collectively, the plans, laws and activities should pave the way for a soft landing of Bahrain’s economy.

The writer is a Member of Parliament in Bahrain.