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Bahrain is one of the financial centres of the Middle East and is home to a number of multinational companies. The Bahrain Economic Development board has revealed a growth figure of 5% in 2013, putting it amongst the best in the region. So what’s been making the difference to the Bahraini economy in recent years?
Increased Consumer Spending
Growth and a positive economic climate have led to an increase in disposable income and consumer spending In Bahrain, which was reported by the Ministry of Finance to have reached an all time high in 2012. Increased consumer spending and influx of foreign workers have a high correlation and are parallel indications of a robust economy.
The Westernisation of Consumer Habits
A recent report on Consumer Lifestyles in Bahrain published by Euromonitor International reveals that ‘stability will see consumers’ attitudes and habits become more ‘Western’ in coming years with increased spending in a wide range of retail and other sectors.’ This projected westernization of consumer spending is reflective of a wider trend in the Middle East. This trend has been instigated by the presence of multinational companies and the diversification of the population via an influx of foreign workers.
The Contribution of Foreign Workers
The UAE and surrounding kingdoms have long been attractive destinations for western workers thanks to the prevalence of highly-paid jobs in the banking, business, retail and tourism sectors and substantial tax perks. Savings accounts in Dubai, Bahrain and other Middle Eastern locations are well maintained by foreign workers who are often able to save over 10% of their tax-free earnings and thus contribute massively to consumer spending. It is estimated that foreign workers now make up around 40% of the Bahraini population.
Consumer Trends in Luxury Goods
The luxury lifestyle is what attracts many western expats to Bahrain where the luxury goods industries are thriving. Bahrainis are the second biggest spenders on luxury goods in the Middle East according to the American Express Middle East Luxury Spending Tracker. Goods including electronics, jewellery and high fashion perform very well in the kingdom where brand awareness is increasing with the influx of multinational retail chains and Western consumer habits. The Bahrain Consumer Electronics Report reveals that tablets and smart phones are top of the list when it comes to the purchase of electrical goods.
Tangible luxury goods are currently more important to Bahraini consumers than luxury experiences, with an emphasis on quality and brands.
As positive economic growth is projected to continue into the coming years consumer spending will also have plenty of scope for growth. The influx of foreign workers and culture looks set to strengthen the trend towards a more Western style of consumption.
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