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For the time being, we are happy to stick to our projections which see Bahrains real GDP expanding 0.9% and 1.3% in 2011 and 2012 respectively. We expect throughput growth at the countrys ports to exceed this, though we caution that any further escalations of political violence could stymie this. Developments at the countrys maritime facilities are moving them forward. The plan to re-establish Mina Salman as a commercial port has moved a step closer to fruition, with bids sought for the operation of a building materials terminal there.

Headline Industry Data

- Growth in KBSP total tonnage throughput forecast at 7.8% in 2012, with average annual growth forecast at 6.8% between 2012 and 2016.

- Growth in KBSP container throughput forecast at 7.3% in 2012, with average annual growth of 4.7% over our forecast period.

- Real growth in total trade forecast at 4.0% in 2011 and to average 4.2% over the medium term.

Key Industry Trends

GOP To Manage VTMS Operations At KBSP

It was announced in October 2011 that Bahrains General Organisation of Sea Ports (GOP) had taken complete charge of Vessel Traffic Management System (VTMS) operations at Khalifa Bin Salman Port (KBSP). The initiative is designed to help secure coastal surveillance and maintain sovereignty in the kingdoms surrounding territorial waters. The new VTMS will also help improve vessel safety, providing vital traffic information during poor weather and regulating maritime traffic flow.

Tender For Modifications Delayed

In November 2011 it was announced that the tender for work on modifications at the Khalifa bin Salman Port (KBSP) had been postponed. The tender had been due that month. The work was to include a new car park with 4,000 spaces and a number of warehouses and other utilities. GOP director general Hassan al-Majed said: It is only some minor issues and we do not expect any delays.

Bids Received For Mina Salman

A number of bids have been received by the GOP to operate the Bahraini port of Mina Salman, which has not been used for commercial operations since the opening of the KBSP. Bids have come from 14 domestic and overseas companies, all but one of which are joint ventures (JVs). The port is to be turned into a terminal for the import of construction materials, to bring a halt to shortages which have plagued the construction sector in Bahrain in recent years. al-Majed said in November: Bahrain currently imports its building materials from neighbouring countries in small vessels or barges, but with the development of the bulk building materials terminal, which enjoys a deeper draught at 10m, a larger market for construction materials is expected to be established. al-Majed went on to say how he believed the port would be a success given its proximity to the centre of Manama, the King Fahad Causeway (to Saudi Arabia) and the KBSP.

Key Risks To Outlook

Should the government fail to address some of the protestors main grievances, Bahrains political crisis could rumble on for longer than expected, with the risk of the opposition becoming radicalised increasing by the day. It remains unclear what impact 2011s political crisis will have on the countrys long-term economic outlook. Should investors begin to reassess the costs of doing business in the country, and begin relocating to Dubai or Doha, Bahrains growth outlook would suffer accordingly. All of this could add downside risk to our port throughput forecasts for Bahrain.

On the upside, the redevelopment of the Mina Salman port could see throughput levels experience considerably higher growth than BMI is currently forecasting at the facility. It is not yet clear when the building materials terminal is expected to become operational.