In the past three decades or more Bahrain has developed as a regional financial centre for the Gulf and for much of the Arab world. Unlike other Gulf states with abundant oil and gas resources, Bahrain has relatively little in the way of natural resources and has built its financial services industry into its prime economic motor, accounting for 27.6% of gross domestic product (GDP) at year-end 2005.
Just as markets change, Bahrain has had to adapt to major upheavals such as the 1990-91 Gulf war and refine its financial focus to meet regional demands. But while Bahrain has been able to reinvent itself over the decades and target new areas such as Islamic finance and insurance, today it faces its stiffest challenge yet in maintaining its regional role as other countries in the region, including Saudi Arabia, open their financial sectors and provide direct competition.
