Bahrain: Piecing the BoP puzzle

Research evidence excerpt

Bahrain: Piecing the BoP puzzle

gan - Shaded area represent JPM forecast

issuance and improving prospects for normalisation in the

Bahrain is both an importer and exporter of hydrocarbons andStrait of Hormuz should provide some buffer. We believe the

has recorded a net hydrocarbon trade surplus averagingFX reserves decline was driven primarily by CA pressures

around 10% of GDP in recent years. The disruption to ship-with some contribution from lower foreign bank debt and

ping through the Strait of Hormuz, combined with attacks onhence a less negative net foreign asset (NFA) position. Risks

regional facilities, likely led to a substantial decline in hydro-remain elevated due to oil market dynamics and uncertainty

carbon export revenues. By contrast, the non-hydrocarbonsurrounding aluminium trade. Regional support, already criti-

trade moved into surplus as imports contracted sharply due tocal before the Iran conflict, has become even more important.

weaker activity and trade disruptions. Imports fell significant-

ly in March and April and, despite some recovery in May,

Figure 1: GCC change in official reserves between Feb-May 2026*

remained around 25% below year-ago levels (Figure 3).

US$bn

5 Chg %GDP Chg % Exports also fell sharply immediately after the conflict shock,

but rebounded strongly in May, suggesting that regional sup-

0 ply chains have begun to adapt, including through alternative

routes that bypass Hormuz via the Red Sea.

-5

-10 Figure 3: Bahrain non-oil trade and tourism receipts

BHR: -60.1% Non-oil imports

US$mn both axis

-15 2000 Non-oil exports 400

BHR KUW OMN QAT KSA UAE PoS transactions for cards issued abroad (rhs)

Source: Local Central Banks, J.P. Morgan - UAE and Oman data up to April 1500 300

Piecing together the current account puzzle 1000 200