Bahrain Trade and Foreign Investment

By | July 23, 2022


  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The EU is Bahrain’s second most important trading partner, accounting for 8.6% of total foreign trade. The first is Saudi Arabia, with a share of 27.7% of Bahrain’s total foreign trade. In Bahrain’s exports, EU countries are in 2nd place with a share of 12.7%. EU countries are then the fourth largest import partners to Bahrain. Bahrain is a country that lives largely from the oil industry and aluminum production. The rest of its needs are covered by imports. For this reason, the balance for Bahrain is negative. Even the COVID-19 pandemic did not damage imports from the EU. 60.7% were base metals, followed by 28% mineral products. In contrast, exports to the EU are constantly oscillating. The main items of export to EU countries are machinery (20.7%) and transport equipment (20.5%).

  • Allcountrylist: Overview of major industries in Bahrain, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 1,650.90 1,622.20 1,824.30 1,843.50 1,840.10
Imports into the EU (million EUR) 796.2 1,158.60 853.4 721.7 1,221.60
Balance with the EU (million EUR) -854.7 -463.5 -970.9 -1 121.7 -618.6

Source: European Commission

Trade relations with the Czech Republic

The volume of mutual trade in 2021 increased by 57% year-on-year. Imports to the Czech Republic from Bahrain increased by 14.9% and exports to Bahrain increased by 34.5%. The main components of Czech exports are processor units and passenger cars, whose exports even increased by more than 500%. This can be attributed to the new representative of the Škoda brand. Although mutual trade is not large in terms of volume, it is developing favorably.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.4 0.7 0.8 0.4 0.5
Imports to the Czech Republic (billion CZK) 0.6 0.4 0.2 0.2 0.3
Balance with the Czech Republic (billion CZK) 0.2 -0.4 -0.6 -0.2 -0.2

Source: CZSO

Trade relations with countries outside the EU

Outside the EU, the main trading partners are mainly the countries of the region, especially Saudi Arabia and the United Arab Emirates. Oman is also in the top ten. Other important partners include the USA, Australia, India, Japan, Brazil and South Korea. Compared to 2020, mutual trade with these countries has returned to or exceeded pre-pandemic levels. In particular, imports from these countries exceeded exports for the first time since 2017. Unlike most countries in the region, China is not among the top ten trading partners.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 11,418.7 13,897.1 13,708.6 9,154.7 15,131.0
Imports to countries outside the EU (million EUR) 12,868.5 15,085.0 14,492.4 11,463.1 13,386.2
Balance with non-EU countries (million EUR) -1,449.8 -1 187.9 -783.8 -2,308.4 1,744.8

Source: EIU, Eurostat

Foreign direct investment

In 2020, the amount of foreign direct investment (flows) in Bahrain reached USD 1 billion for the first time. It reached USD billion in the first three quarters of 2021 The total accumulated amount of foreign direct investments (stocks) reached USD 3billion in the third quarter of 2021.

The focus of foreign investment lies in financial and insurance services (67%), manufacturing industry (14.8%) and wholesale and retail trade (4.9%). The main investors in the country are Saudi Arabia (29.9% of all accumulated investments) and Kuwait (29%).

Information on direct foreign investments of the Czech Republic in Bahrain is not known. However, Bahraini entities have invested in the Czech Republic, for example the Tree of Life Spa in Belohrad Spa.

FTAs and treaties

Treaties with the EU

The EU has long sought to conclude a comprehensive free trade agreement with the GCC countries. However, negotiations are deadlocked. In the absence of this agreement, individual member states conclude bilateral (economic, investment and tax) agreements with Bahrain.

Treaties of the Czech Republic

The Czech Republic concluded an agreement with Bahrain on the avoidance of double taxation (59/2012 Coll. ms), investment protection (117/2009 Coll. ms) and air transport (43/2017 Coll. ms).

Other Bahrain agreements

Bahrain has free trade agreements with 22 countries, investment agreements with 34 countries and tax agreements with 41 countries. It concludes agreements bilaterally or through the GCC. Therefore, if a Czech company locates production in Bahrain, the goods produced there can be freely sold on the markets of the GCC, GAFTA, the three EFTA countries (NOR, ICE and CHE) to Singapore or the USA.

Developmental cooperation

Bahrain does not fall into the category of countries that would be a recipient of development aid. Another category is aid provided to Bahrain, for example from the USA, which is mainly focused on the security sector. However, the country is the recipient of an economic aid package from neighboring states (KSA, UAE, KW) in the amount of 10 billion USD from 2018, which is tied to the implementation of economic and fiscal reforms.

On the other hand, Bahrain does not even appear among significant providers of development aid, although in the past we can record some isolated cases, e.g. within the group of Arab states (aid to Mali, Iraq, etc.).

Prospective fields of study (MOP)

Prospective export items represent supplies to the three main sectors of the Bahraini economy, i.e. the oil industry, banking and tourism. The most imported to Bahrain are mechanical and electrical equipment, means of transport, food, chemicals, iron products and textiles. These industries are promising for Czech exporters as well. Stable items of Czech exports are switchboards, lighting, cars, PC components, sugar, compressors, glass.

MOP is not processed for Bahrain.

Bahrain Trade