Macroeconomic performance and standards of living in Bahrain

Macroeconomic performance and standards of living in Bahrain Macroeconomic performance and standards of living in Bahrain Levels of income and wealth are the key determinants of individual or the countries wellbeing Macroeconomic performance and economic standards of living involves factors such as income, living costs, household size and even the composition of the family size. When the economy is doing well, this is likely to be shown by a number of opportunities for citizens of a particular country and consequently better conditions of living. Bahrain is a small island state with and in 1996 it had a total population of 598, 652 people. Current indicators show that there is a population growth rate of about 3.6 percent, which is basically among the highest in the world (Hakimian, 2000 30). It has fertility rate of 3.2 % and a population density of approximately 2, 000 inhabitants per square mile and this also is among the highest in the world. The population considerations presented above are an essential dimension of Bahrains sustained economic growth and sustainable development. Bahrain has made steady progress in achieving its development goals meaning the macroeconomic performance is doing very well. The Human Development Report of 1997 ranks Bahrain number forty three out of a hundred and seventy five countries with a human development index of 0.87. Per capita income as per that time was estimated at $7, 460. Social indicators showed that Bahrain has marked improvement in the quality of life. The achievements were aided by the early development of the of the oil industry, which financed projects in the education sector and health services as well as economic diversification (Hakimian, 2000 32). The development of a regional airline and the completion of a causeway to Saudi Arabia stimulated tourism, while the rapid growth of offshore banking advanced Bahrains financial role. Also the aluminum smelter (ALBA) boosted downstream aluminum-based industries promoting the development of petrochemicals, which further laid the foundation for further downstream gr owth. {t_essay_order} Comparison of data for Bahrain Bahrains: Selected Economic and Social Indicators, 2007-12 2007 2008 2009 2010 2011 2012 Real economy (change in percent) Real GDP 2.3 0.4 -3.0 0.4 1.7 1.9 Domestic demand 3.2 0.6 -2.0 0.5 1.7 1.7 CPI (year average) 1.6 3.2 0.3 1.1 1.4 1.8 Unemployment rate (in percent) 8.3 7.8 9.5 10.2 10.0 9.6 Gross national savings (percent of GDP) 21.2 19.9 18.8 18.2 18.2 19.5 Gross domestic investment (percent of GDP) 22.2 22.2 20.4 20.3 20.4 20.4 Public finance (percent of GDP) Central government balance -2.1 -2.8 -5.7 -6.0 -5.7 -5.3 General government balance -2.7 -3.4 -7.4 -7.5 -7.1 -6.6 Structural balance (percent of potential GDP) -3.0 -3.3 -3.9 -3.9 -4.1 -4.4 Primary balance 0.0 -0.6 -5.0 -4.8 -4.0 -3.3 General government gross debt 1/ 63.9 67.5 77.5 83.9 88.3 91.7 Money and interest rates (in percent) Money market rate 2/ 4.0 3.8 1.1 Government bond yield 2/ 4.3 4.2 3.6 Balance of payments (in percent of GDP) Exports of goods 21.1 21.1 15.4 15.4 15.9 16.3 Volume growth (in percent) 2.5 -0.5 -14.5 -0.9 3.8 4.3 Imports of goods 23.2 24.1 17.8 18.4 19.0 19.4 Volume growth (in percent) 5.4 0.6 -10.6 -0.4 3.3 3.3 Trade balance -2.1 -3.0 -2.4 -3.0 -3.1 -3.0 Current account -1.0 -2.3 -1.6 -2.1 -2.2 -2.1 FDI (net) -2.5 -3.6 -2.5 -1.0 -1.0 -0.9 Official reserves (US$ billion) 2/ 45.7 33.6 24.7 ... ... ... Fund position (as of December 31, 2008) Holdings of currency (percent of quota) 86.3 Holdings of SDRs (percent of allocation) 58.1 Quota (SDRs million) 10,739 Exchange rates Euro per U.S. dollar 2/ 0.73 0.68 0.75 ... ... ... Nominal effective rate (2000=100) 2/ 102.4 104.9 103.6 ... ... ... Real effective exchange rate (2000=100) 2/ 103.6 106.0 102.1 ... ... ... Potential output and output gap Potential output 2.1 1.3 0.9 0.8 0.9 1.0 Output gap 0.9 -0.1 -3.9 -4.3 -3.6 -2.7 Social indicators Macroeconomic policies implemented by the government of Bahrain Environmental conservation The government has been consistent with commitment to sound resource management and conservation. A sequence of institutional and regulatory measures was recently including the establishment of a National Environmental directorate and the preparation of a plan of action that will take into account of efficiency in use of natural resources and their subsequent rates of depletion and regeneration; and also consider the ability of the environment to absorb and conform with technology together with its requirements of sustainability. The plan has been incorporating efforts from all agencies, the civil society and also the private sector and it is worth of note that a clean environment has been achieved. To achieve economic growth, people must work in a clean environment and minimizing or no illness to workers will boost economic development. Personnel development There has been extensive human resource development to meet the qualities of personnel needed in the job market. There has been enhancement of institutional capabilities to capture the concern of those who establish the development policy which has brought up new programs that aim at increasing the number of Bahrain nationals in the Labour force and equipped with multifaceted skills. In relation to this the government has also ensured that the right infrastructure is in place for no economy is likely to improve if the state of the infrastructure is pathetic. Cooperation with UNDP The government of Bahrain has recognized the importance of UNDP in supporting socio-economic development. It has sought the co-operation because of the quality of UNDPs programs and their universalism and neutrality. The government has considered UNDP a source of technical and methodological guidance on policy development, as a pathway of working and information sharing, and a facilitator of program implementation efforts. The intercourse with UNDP is aimed at aligning personnel development with sustainable livelihoods and employment generation, strengthening institutional capacity for economic management, and promoting environmental conservation and regeneration. Gender issues The gender dimension is considered as very integral in the employment programs at Bahrain. Bahrain women form part of 34 % of the public sector employment and 13.3 % of the public sector employment. The government has realized that investing in womens capabilities contributes to sustainable economic growth and reinforces the countries goal of increasing the number of its citizens in the work force and in the long run development benefits (Acemoglu, 2006 73). The development of employable skills for women and changing social and family attitudes towards the roles of women have been priotised by the ministry of Labour and Social Affairs which has been a big boost to the economy of the country. Water resource conservation The government has been protecting aquifers from salinity and depletion. Bahrains urban and rural economic activities are highly dependant on water and it should be saved for future use. The government has been making every effort to control excess water use and the reuse of waste water for watering municipal flower, hedges and fodders. Artificial recharge of treated water is being studied, and the distribution of water is under review to prevent leakage (Acemoglu, 2006 68). Conclusion In summary macroeconomic policy in Bahrain has led to the achievement of major among other things, has brought inflation under control, freed up prices within the economy, shedding state owned resources to make them more productive, increase of fiscal revenues, lowering the average custom duties, generating foreign exchange reserves and have strengthened the countries financial institutions.