Moody’s Investors Service downgraded its outlook for Bahrain from stable to negative, attributing the change to the adverse effects of regional conflicts on trade and energy flows over the weekend.
Critical infrastructure in Bahrain was targeted in the latest Iran conflict. The temporary closure of the Strait of Hormuz hindered exports of essential Bahraini products, although the passage reopened last Friday following a ceasefire between Lebanon and Israel.
The ceasefire remains in place despite reports of violations across the region ahead of a scheduled second round of talks in Islamabad, Pakistan this week.
Disruptions in maritime shipping and air travel have adversely impacted Bahrain’s hydrocarbon and aluminium exports. Moody’s confirmed Bahrain’s B2 credit rating, six levels below investment grade.
However, the agency noted that this rating could change owing to a resumption of oil and aluminium exports if the conflict ends “with no prolonged impact on the country’s export capacity or economic model.”
The IMF downgraded MENAP growth to 1.3%: a downgrade of 2.3% from October 2025.
Bahrain also saw a downgrade for FY26 as the IMF forecasts a contraction of 0.5% in FY26.
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