The investment climate in the Kingdom of Bahrain is positive and relatively stable. Bahrain maintains a business-friendly attitude and liberal approach to attracting foreign investment and business.

In an economy dominated by state-owned enterprises, Bahrain aims to foster a greater role for the private sector to promote economic growth. Government of Bahrain (GOB) efforts focus on encouraging foreign direct investment (FDI) in the manufacturing, logistics, information and communications technology (ICT), financial services, and tourism sectors.

Bahrain’s total FDI stock reached BD 11.537 billion (USD 30.683 billion) in 2020. Annual FDI inflows have dropped from BD 603 million (USD 1.6 billion) in 2018 to BD 355 million (USD 942 million) in 2019 and BD 333 million (USD 885 million) in 2020. The financial services, manufacturing, logistics, education, healthcare, real estate, tourism, and ICT sectors have attracted the majority of Bahrain’s FDI.

The Covid-19 pandemic, in tandem with the global oil price collapse in 2020, weakened GOB efforts to generate revenue and reduce public spending. In April 2020, Bahrain implemented a BD 4.3 billion (USD 11.4 billion) financial relief package, equivalent to 29 percent of GDP, to ease the economic impact of the pandemic. Key provisions of the package were continued into 2021. To strengthen Bahrain’s position as a startup hub in the region and to enhance its investment ecosystem, the GOB launched Bahrain FinTech Bay in 2018; issued new pro-business laws; and established the USD 100 million Al Waha venture capital fund for Bahraini investments and the USD 100 million superfund to support the startup growth. Since 2017, the Central Bank of Bahrain (CBB) has operated a financial technology regulatory sandbox to enable startups in Bahrain, including cryptocurrency and blockchain technologies, and regulates conventional and Sharia-compliant businesses.

Bahrain permits 100 percent foreign ownership of new industrial entities and the establishment of representative offices or branches of foreign companies without Bahraini sponsors or local partners. In 2017, the GOB expanded the number of sectors in which foreigners are permitted to maintain 100 percent ownership in companies to include tourism services, sporting events production, mining and quarrying, real estate, water distribution, water transport operations, and crop cultivation and propagation.  In May 2019, the GOB loosened foreign ownership restrictions in the oil and gas sector, allowing 100 percent foreign ownership in oil and gas extraction projects under certain conditions.

For more information, please refer to: https://www.state.gov/reports/2021-investment-climate-statements/bahrain/

December 18, More new vehicles moved through Khalifa bin Salman Port this year, with 41,013 cars and other vehicles recorded in the first 11 months of 2025, up from 38,926 over the same stretch last year, a rise of 5.4 per cent.

December 17, Turkey’s Treasury and Finance Minister said Turkey is prepared to expand its partnership with Bahrain through joint initiatives in renewable energy, defense industries, artificial intelligence, health tourism, and construction, citing aligned economic visions and complementary strengths.

December 2, Bahrain has reduced the minimum real estate investment required for its Golden Residency Visa. The Nationality, Passports, and Residence Affairs (NPRA) confirmed that the investment threshold has been lowered from BHD 200,000 (US$530,555) to BHD 130,000 (US$345,000), a 35 percent reduction aimed at boosting property demand and strengthening Bahrain’s competitiveness.

November 22, S&P Global Ratings downgraded Bahrain for the first time since 2017 as the Gulf country’s fiscal position deteriorates and debt levels rise. The sovereign credit rating was cut one level further into junk to B from B+ with S&P analysts citing the small island nation’s fiscal struggles along with elevated indebtedness as the main catalysts behind the downgrade. 

November 10, Bahrain is rolling out the red carpet for Chinese tourists and investors, as the Gulf nation pins high hopes on tourism to diversify its economy. The island kingdom saw a 40% year-on-year surge in Chinese travelers in the first three quarters of 2025, following the launch of direct flights from its capital Manama to Beijing and Shanghai in May 2024. 

November 3, Bahrain is set to inject an additional $17 billion into its economy through new projects, building on the success of having already attracted $17bn in foreign direct investment since 2018. The massive investment pipeline was announced by Finance and National Economy Minister at the opening of the flagship Gateway Gulf investment forum.  

October 7, Bahrain’s economy expanded by 2.5 percent year on year in the second quarter of 2025, driven by a 3.5 percent rise in non-oil activity, the finance ministry said. Non-oil activity accounted for 85 percent of real GDP in the quarter to June. 

October 5, Bahrain has completed six key initiatives under the National Digital Economy Strategy (NDES), a framework that supports the kingdom’s ambition to become a leading digital economy in the region. The announcement underscores King Hamad bin Isa Al Khalifa’s vision to leverage artificial intelligence (AI) and advanced technologies to transform government services and strengthen Bahrain’s position as a hub for digital innovation.

September 2, The government has introduced a new resolution that exempts industrial inputs from customs duties under specific conditions. Government emphasized the importance of localising industries and replacing imports with high-quality domestic products to enhance competitiveness, achieve self-sufficiency, and drive sustainable development. 

September 1,  In a major step toward boosting national infrastructure and accelerating its sustainability goals, Bahrain’s Electricity and Water Authority (EWA) has officially launched an international tender for the development of the Sitra Independent Water and Power Production Plant (IWPP). The high-capacity project aims to generate 1,400–1,500 megawatts (MW) of electricity and 30 million imperial gallons per day (MIGD) of potable water.

August 25, Bahrain has taken fifth place among the strongest lslamic economies. The kingdom scored 81.9 points, maintaining its standing in lslamic finance across the region. The report pointed to Bahrain's flexible and varied economy, built on updated legislation. private-sector incentives, investment in skills, and growth in tourism and industry.

July 23, Bahrain has been added to China's visa-free list in a move that strengthens the Kingdom's global mobility and reflects broader gains by Gulf passports. 

July 19, Bahrain has imported more than 22,200 vehicles in the first six months of 2025, marking a 15% increase compared to the same period last year. The growth reflects rising consumer demand, supported by a booming local market, population growth, ongoing housing expansion projects, and increased consumer lending activity, especially in the auto sector. 

July 10, Bahrain has been ranked as the most cost-competitive location to operate a financial services firm with a tech hub within the GCC countries, with a 48% cost advantage, in the ‘Cost of Doing Business in the GCC’ financial services sector report published by Ernst & Young LLP’s United States office.

June 24         Saudi Arabia and Bahrain have launched the second phase of their industrial integration initiative, aiming to boost bilateral trade, investment, and cross-border supply chain cooperation. This comes amid strengthening economic ties between the countries, with the Saudi Arabia’s direct investments in Bahrain reaching SR35 billion ($9.33 billion) in 2023. 

June 13        Bahrain's economy will grow 3.5 % this year and 3% in 2026, according to the World Bank’s most recent forecast. It said growth in GCC states is forecast to increase to 3.2% in 2025, 4.5% in 2026, and 4.8% in 2027, as the phase-out of oil production cuts is expected to lead to rising oil production. 

May 8           Bahrain’s Ministry of Finance released the country’s 2024 economic report today. Bahrain’s real GDP growth rate for 2024 is 2.6%, with non-oil sectors growing by 3.8% and the oil sector contracting by 4.0%. 

May 8             Bahrain – Parliament unanimously approved a new tax on multinational enterprises: large multinational corporations that operate in multiple countries and generate at least 750 million euros in revenue in at least two of the previous four years are subject to a global minimum corporate tax rate of 15%. Finance and National Economy Minister said 348 multinational companies operating in Bahrain would fall within the scope of the new law, with projected annual tax revenues of approximately BD130 million.

April 24, Continued fiscal reform efforts, stable economic diversification, and financial support from Gulf Cooperation Council partners have led S&P Global Ratings to affirm Bahrain's long- and short-term foreign and local currency sovereign credit ratings at “B+/B.”  

April 3, Xpeng has inked a distributor deal to enter the Bahraini auto market, as the Chinese electric vehicle maker aims to double its international presence this year. The company recently entered into a strategic partnership with Ebrahim K. Kanoo, Bahrain's largest automotive distributor group.