Fitch affirmed Bahrain’s long-term foreign and local currency Issuer Default Rating (IDR) at BBB and BBB+, respectively, with a stable outlook based on robust economic growth forecast and a stagnant political scene.
With an estimated current account surplus of around 10% of GDP for 2013, Bahrain maintains a very strong external position, which following 10 years of surpluses, translated to an overall net creditor position amounting to 100% of GDP at end of 2012, according to calculations made by Fitch. It estimates that real GDP growth will rise to 4.9% in 2013 up from 3.4% in 2012 following the resumption of oil production at the main Abu Saafa field. Economic growth is expected to be maintained at the same pace driven by steady oil output and the disbursement of GCC project funds propelling the growth of the non-oil sector.
The rating agency expects the political stalemate between the minority Sunni-led government and the majority Shiite dominated opposition to continue with low level violence on-going. With parliamentary elections scheduled for October 2014 there could be chances of additional flare-ups of violence.
Fitch also reaffirmed BBB and BBB+ rating on Bahrain's senior unsecured foreign and local currency bonds, respectively. While retaining Bahrain's Country Ceiling at BBB+ and short-term foreign currency IDR at F3.
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