Boston, MA -- (ReleaseWire) -- 04/11/2014 -- Looking at trends for 2014 and beyond, BMI believes that the Bahraini auto market will continue to see strong and steady growth, with total sales set to near 65,000 per year by the end of our newly extended forecast period in 2018.
The most recent Bahraini new light passenger vehicle sales data (for the first nine months of 2013) show an 11% increase, to 38,213 units. This ties in well with BMI's own view that new vehicle sales should increase by 14.5% over the year as a whole.
Backing up our optimism towards the local sales market is a favourable economic backdrop. BMI's Country Risk team forecasts relatively robust economic growth of 3.4% in 2014, as elevated public spending and support from the rest of the Gulf Cooperation Council (GCC) help to underpin non-hydrocarbon activity. However, output gains from the oil sector will be limited after a strong recovery in production in 2013, leaving government-backed construction activity and a modest recovery in the private sector as the main drivers of growth.
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There are also signs of improvement in business activity. Bahrain's US$7.1bn sovereign wealth fund Mumtalakat, which holds significant stakes in national non-oil firms ranging from aluminium to food production (and therefore provides a good indication of the strength of the economy), stated in January 2014 that the performance of its portfolio is improving, following financial losses over 2011 and 2012. The Bahraini stock market has also been on an upsurge since the start of the year (with gains of 4.4% to-date), after having remained flat throughout the second half of 2013. Finally, we expect a number of public infrastructure projects to be initiated over the coming quarters, a factor that should help to widen Bahraini banks' lending opportunities.
Turning to the outlook for private consumption - a key indicator of likely demand for new vehicles - BMI is targeting growth of 5.8% in 2014, down only slightly from the 6% estimated for 2013. Employment continues to rise and there has been expansion of 14.6% in personal loans over the year to September 2013.
We also expect infrastructure projects to support commercial vehicle sales in particular. For example, the government of Bahrain will soon launch a tender for the expansion project of the Bahrain International Airport. Under the expansion, the successful bidder would undertake comprehensive maintenance of the current departure building and all its facilities. The expansion will also involve around five additional contact gates, 40 new check-in counters, nine remote gates and a large transfer facility. The expansion is expected to increase the passenger capacity up to 13.5mn annually, from the current capacity of 9mn. Overall, we retain an optimistic near-term stance towards Bahraini new vehicle sales and believe there could be clear upside risks to our current forecast of 7.2% sales growth in 2014.
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