CNN
 — 

Like many other Middle Eastern economies, Bahrain has been trying to move away from its dependence on fossil fuels. In 2000, oil and gas made up 44% of its GDP; now that figure is 16%.

“Economic diversification is as old as time,” Shaikh Salman bin Khalifa Al Khalifa, Bahrain’s Minister of Finance and National Economy, told CNN’s Richard Quest at Gateway Gulf, a gathering of business professionals, government officials and investors held this week in the country, under the theme “Investing in a Rapidly Transforming Region.”

“Bahrain was always a trading hub for the region, always had its pulse on what was happening around the world,” he said, adding that today the country acts as a “service center” for the Gulf region as a whole.

The event concluded with deals and announcements to the tune of $12 billion, across sectors including finance, manufacturing, real estate and tourism.

In recent years, other members of the Gulf Cooperation Council — an economic and political union that also includes Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — have had varying degrees of success in expanding their economies beyond fossil fuels.

“As we look around the region, what is happening rapidly in all of the economies of the GCC is an increase of the diversification, more economic activity in other sectors, and that brings along with it a lot of opportunities for investment,” Al Khalifa said.

The GCC economy as a whole is projected to grow by 3.6% and 3.7% in 2024 and 2025 respectively, according to the World Bank, which estimated that its combined GDPs could reach $6 trillion by 2050.

Finance and tourism

Bahrain has been looking to a number of sectors to help that diversification. According to the latest government data, the country’s top growing sectors in the first quarter of this year were accommodation and food services, finance and insurance, communications, and retail.

In October, the National Bank of Bahrain launched a Bitcoin investment fund, aimed at institutional investors — a first for the GCC. The country is trying to attract more tourists, and works are underway for a $427 million waterfront development project that will bring new beaches, restaurants, hotels and water-based attractions to Bahrain’s coastline. It includes a new $221 million exhibition center that’s set to be the largest in the Middle East.

At the Gateway Gulf event, Bahrain’s Minister of Tourism announced the construction of 16 new hotels totaling over 3,000 rooms. That follows on from a $30 billion post-pandemic recovery plan launched in 2021, which included plans to build five offshore cities and infrastructure projects to further boost tourism.

According to Steffen Hertog, an associate professor in Comparative Politics at the London School of Economics and Political Science, Bahrain has made progress in diversifying its economy, but is facing stiff competition from other Gulf nations with more resources. “Dubai has taken much of the regional logistics and tourism business,” he said, adding that Dubai and Abu Dhabi had taken on the role of regional financial hubs.

“At the same time, Saudi Arabia has upped its game in terms of financial diversification, tourism and entertainment, much reducing the Saudi demand for such services across the causeway (in Bahrain),” Hertog added.

However Al Khalifa believes that the success of its GCC partners will ultimately prove beneficial for Bahrain. “All of us are working together to increase economic activity, increase the pie for the whole region, and this rising tide will lift all of the economies of the region.”