MACROECONOMICS2007IntroductionMacrostinting is a study of rescue , which involves the study of a earth and all its determinants . Since it negociates with one nation and has vast sense of correlation to various factors , therefore , macroeconomic is a lot more(prenominal) complicated than the study of a single corporation as in microeconomics concord to Elbadawi , and Majd (2001 , the domain s parsimoniousness has distinctive characteristics as they earn got large amount of professionalducer and consumer subsidies and misaligned coin as s wellhead . The narrow down becomes the underlying reasons behind the decreasing savings charge per unitsThey besides point out that the misalignment of exchange rate further encourages the awkward to increase their imports in to providing incentives to non- natural petroleum goods . The situation suggests that the unpolished depend by and large on anoint sector . The macroeconomics of the demesne is worsening as they experience the appreciation of dinar that further suppresses the unsophisticated s non-fuel sight commodities . Since the uncouth depend heavily on fuel commodities and the oil price dries up , the country can still prevent gritty standard of living as the non-oil gross domestic product shows high growing ratesConcerning the macroeconomics issues , this depart analyze the macroeconomics of Bahrain this will defend or criticize Bahrain macroeconomics condition and examine the country s indemnity regarding the macroeconomics conditionCountry BackgroundBahrain was a country captured from the Persians in 1782 . In to protect its autonomy , the hatful of Bahrain turned to the British and made themselves a British associated state . In 1971 b arely , the region regain its independency from the British . The country is small compare to opposite(a) Persian disjunction countries . The country was first a producer and exportationer of oil , only when as oil reserves are declining , the country vanquish to petroleum refining and processingMoreover , the country also focuses in its pecuniary contrast organic evolution and became one of the most well know international banking centers . The country has experienced some(prenominal) economic faults and governing bodyal reforms that reflect the growing disposition of the region . It was the economic transformation that brought the country their name in the international world however , the modish political condition indicated that new political issues will ariseEconomic ProGDPIn this chapter , I will provide the basic economic measurements of the country , and afterwards , there will be assessment of the boilersuit condition of the country s economy . In terms of GDP , the country has one of the highest GDP in the disconnect . The country produces 12 .12 billion (GDP in official exchange rate ) in 2006 . 21 .1 of the GDP is investment in nature . GDP per capita exceeded 25 ,000 in 2006 (Bahrain , 2007In terms of GDP growth rate , Bahrain grew 7 .6 in 2006 , which is near the average yearly growth rate of the country . Like most of the advanced countries of the west , most of the GDP comes from the services sector (60 , followed by the persistence sector (38 . The country is non agricultural in nature and thus , agriculture contributes almost no tax revenue for the economy (Bahrain , 2007Inflation and the Labor ForceBahrain has the lowest inflation rate in the Gulf , 3 .5 in 2006 . This reflected the relatively stable condition of the economy , without operative recession of bursts of growth . Bahrain has a comfortably large working class force . In 2006 , they amounted to 352 ,000 people . closely of them worked in the industry sector (79 ) followed by the services sector . The level of unemployment is nevertheless(prenominal) , quite high (15 in 2006 (CIA , 2007Bahrain has a unique issue regarding its labor force . 44 of the labor force is not of Bahrain nationality . In other words , championship owners in Bahrain have the habit of employing foreign labors in addendum to local anesthetic ones . This issue , apparently , is not taken thinly by the governing body of Bahrain . In to address the unemployment problem go about by the local people of Bahrain , the government deployed a policy that postulates all businesses in Bahrain to have minimum amount of local worker working in their production or institution facilities (CIA , 2007Exports and National CurrencyIn 2006 , the Bahrain government has revenue of 5 .582 billion , mend government expenditure is around 4 .197 . Public debt is approximately 34 of the GDP (in 2006 . Exports of the nation amounted to 12 .6 billion per annum , which includes petroleum and petroleum products like aluminum and textiles (CIA , 2007The country imports crude oil , chemical materials and machinery . Its import partners include Saudi Arabia , lacquer , Germany , the United severalises United Kingdom , etc . Bahrain has quite and external debt , which amounted to 7 .267 billion in 2006 . Bahrain has a quite powerful currency . The Bahrain dinars worth approximately 2 .65 US dollars , or 1 US is worth 0 .376 Bahrain dinars . This rate stayed the same since 2002 (CIA , 2007 .Bahrain s agreement of PaymentsIn terms of payments , Bahrain is often characterized by surpluses in trade of trade and international trade . However , the country is also know for its deficits in unilateral transfers due to the large portion of eject workers sending home most of their incomesHowever , the tarrying reserves of oil still provide the country with significant amount of trade benefits . Together with the advancement of its service sectors , Bahrain s oil trade founder high surplus of payment (Energy nurture Administration , 2006 authorities PoliciesOverview of Bahrain Government PoliciesCurrently , the country has one of the most preferable economic pro in the region . Most analysts refer to Bahrain as the freest economy in the Middle East . It has a well-developed communication and ravish infrastructure , it is the home of several multinational companiesHowever , the main business activity is petroleum processing which account for 60 of Bahrain s export and 70 of Bahrain s revenues Currently , the country has a robust economic growth and analyst predicted that the level of growth will remain for several years . This is due to the positive performance of the pecuniary and construction sectors of the economy . The country however , is still is perform various privatization childbeds and diversification because of the need to realign the country s economy from an oil-based revenue country , to other forms of economy that has much less dependency upon oil production (Energy Information Administration , 2006The depletion of oil is not the only problem faced by the country Analysts identified another problem which is the depletion of underground water resources . The problem is somewhat common for an economy living in the Gulf . These problems however , despite their common nature , are not easy problems to manage . The depletion of oil is predicted to generate major yearn term economic debacles . The economic problems will involve dividing line scarce , slow economic growth and weak revenues (Department of State , 1994On the other hand , the depletion of underground rater resources requires the country to generate other ways to sustain the needs of its people , a exteriorise that will require significant amount of economic resources liner these problems , the country is currently seeking for assistance from the United States . AS a part of the realignment social movement from an oil-based country to business-based economy , the country has entered into the Free Trade Agreement (FTA ) with the United States .
The United States has been establishing FTA s with several of its neighboring countries , but the deal with Bahrain is the first FTA between US and a Gulf State (Department of State , 1994DiversificationAs mentioned above , the government performed massive diversification effort in the 80 s and 90 s in to generate further economic strength and freedom from oil . The policy displayed significant amount of success as the GDP per capita that had shrunk by 2 .4 in the 80 s , catapulted to a growth rate of 36 in the 90 s . The Bahrain government has taken the bold step of embracing economic repose .As mentioned before , this is due to the urgent need of gaining other economic resource beside of the depleting oil reserves . The economic rest generates considerable interest from the surrounding Islamic countries as well as western nations . It generates the growth and tremendous development of the banking industry , heavy manufacturing industry , construction , retail and tourism . The kingdom of Bahrain is today , one of the most trusted centers for Islamic finance (Javedanfar n .dFinancial Business ReformGovernment of Bahrain has put significant investment and effort to improve their financial sectors as a replacement of the concisely missing economic resource from oil reserves . As a result of these investments and government policies , the financial sector in Bahrain has been displaying strong performance and growth . The financial sector is predicted to be the main contributor of Bahrain s revenues soon However , significant concerns are addressed by analysts who stated that there is a significant risk of an overheated economy in Bahrain Nevertheless , the government of Bahrain is positive that the economy is quite resilient to such problemsIn the latest financial periods , the government has enacted regulations that are comprehensive enough to fancy that the banking sector will prevail . Moreover , considerable supervising has also been performed in line with the banking sector development scenario . According to several analyst however , the extent to which supervision has been performed require a little rearment . This is due to the rapid development of the financial sector which leads to enhanced complication of the issues that must be handled by Bahrain s financial institutions (Department of State , 1994 International AgreementsBeside the apparent effort to enhance the financial sector , Bahrain s government has been promoting the country internationally . This is displayed by several efforts like being the fist country in the Gulf that signed a bilateral deal with the Americans . Another effort of international promotion is by enhancing Bahrain s tourism industry . The Bahrain grand Prix is also a way to enhance the quality of Bahrain international pro . These international promotion activities have been recorded to result positive effects for the country as the balance of payments continuously displaying surpluses and growths (Department of State , 1994 .ReferenceCIA (2007 . Bahrain . CIA World Fact set aside . Retrieved November 16 , 2007 from https / vane .cia .gov /cia /publications /factbook /geos /ba .htmlElbadawi , Ibrahim A Majd , Nader (2001 . Macroeconomic theoretical account for an oil-based economy : the case of Bahrain , Volume 1 . Policy , interrogation working s no . WPS 1133 . Transition and macro - adjustmentEnergy Information Administration (2006 . Bahrain-Country Analysis Brief . Retrieved November 16 , 2007 from http /www .eia .doe .gov /emeu /cabs /Bahrain /Background .htmlDepartment of State (1994 . Bahrain . Retrieved November 16 , 2007 from http /dosfan .lib .uic .edu /erc /economics /trade_reports /1994 /Bahrain .htmlJavedanfar , Meir . n .d . Meepas . Retrieved November 16 , 2007 from http /www .meepas .com /Bahrainstrengths .htmPAGEPAGE 7NOV . 16 , 2007PAGE 8 ...If you deficiency to get a full essay, order it on our website: Ordercustompaper.com
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