Bahrain’s move to become a high tech financial hub could be undermined by concerns over its external financing position, a more hardline authoritarian streak, and diplomatic rift with Qatar.

Economic risk (MEDIUM): The downgrade of its sovereign debt to junk by all three ratings agencies highlights the need for further adjustment to restore fiscal sustainability, threatening its currency peg.

Political risk (HIGH): Further crackdowns on opposition parties adds to tensions fuelled by the first state executions in seven years while the blockade of Qatar may have a domestic impact.

Financial risk (LOW): Bahrain has enjoyed strong performances in both its equity and fixed income markets but further work should be carried out to support financial stability.

Commercial risk (LOW): Bahrain is in the top third of countries in the World Bank’s Doing Business Report index and has attracted record investment.