Bahrain has been hit hard by the global credit crunch and economic downturn. Although it is the most diversified and least indebted country of the Gulf Co-operation Council (GCC), and has been a major financial centre in the region for more than 40 years, it became the first to have its sovereign credit rating outlook downgraded from "stable" to "negative" by Moody's at the beginning of the year.
The reason given for the re-rating was the country's reliance on finance and hydrocarbons. Oil and gas production accounts for just under 20% of gross domestic product (GDP) and finance for more than 25%. Bahrain has more than 400 licensed financial institutions, most of which are wholesale operations generating revenues from outside the country.
