Boston, MA -- (SBWIRE) -- 08/14/2013 -- Executive Summary

Notwithstanding a sudden flare up in political discord, sales growth in Bahrain's auto market is likely to be sustained through 2013 on the back of an ongoing economic recovery. We expect the new vehicles market to have reached nearly 41,800 units in 2012, rising to 45,546 as real GDP expands by 3.7% in 2013.

BMI sees Bahrain's economic growth accelerating over the next the second half of 2013 and first half of 2014. Hydrocarbon output is expected to recover following a prolonged technical disruption at the Abu Safa field in 2012, while business activity in the non-oil economy will continue to expand on the back of accommodative fiscal and monetary policy. The release of development funds from the GCC over the next few years should also help boost investment over the medium term, although we expect growth in gross fixed capital formation to stay primarily government-driven. Oil prices will remain at elevated levels, supporting business sentiment and the economy.

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We have also raised our outlook for household consumption slightly on the back of the planned expansion in government current spending, and now forecast growth of 6.0% this year (from 4.5% previously) and 4.0% in 2014. Leading indicators of economic activity provide a slightly more positive picture than in previous quarters, and confirm the continuing recovery of the tourism sector.

In the autos market, this economic outlook will prompt a nearly 9% y-o-y growth in new vehicle sales, to 45,500 units during 2013, with commercial vehicle sales outperforming the passenger cars segment with sales growth of nearly 12% y-o-y. Commercial vehicles accounted for under 15% of the total vehicle sales during 2012, but this proportion is likely to increase to just under 18% in 2013. For the rest of the forecast period to 2017, however, we do not expect the market to maintain this growth momentum and expect sales growth to average close to 5.4% y-o-y between 2014 and 2017 - reaching 56,300 by the end of the forecast period.

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