The gross domestic product of the small non-OPEC oil producer rose by 1.1 percent from the previous three months, the statistics office quoted Prime Minister Sheikh Khalifa bin Salman Al-Khalifa as saying on its website www.cio.gov.bh.

The prime minister said that the second-quarter growth was satisfactory given current economic challenges. 

Bahrain's second-quarter growth marked a slowdown from first-quarter growth of 5.2 percent year-on-year and 1.4 percent quarter-on-quarter.

Analysts have said that Bahrain must reinvent itself as a financial centre to ensure growth, adding that the tiny island kingdom off Saudi Arabia should fund the large infrastructure projects planned in the Gulf region to help achieve this.

The government has pumped less stimulus into its economy than its fellow-oil producers, but it ran a budget deficit in 2009 for the first time since at least 2005 as average oil prices remained below its estimated budget break-even of about $70 to $80 per barrel.

Bahrain's nominal GDP grew 8.2 percent on an annual basis in April-June and 1.4 percent quarter-on-quarter due to higher oil prices and its products as well as a good performance of some nonoil activities, the statistics office said.

The crude oil share of Bahrain's GDP is fairly small at nearly 21 percent, unlike in the rest of the Gulf, the world's top oil exporting region.

Dwindling oil reserves have pushed Bahrain to diversify into other sectors such as financial services.

Bahrain's central bank governor Rasheed Al-Maraj said last week that the country's economy may grow 3 percent to 4 percent this year, broadly in line with a median forecast of analysts polled by Reuters, after 3.1 percent growth in 2009.

The statistics office does not regularly release GDP data, which, much like the rest of the Gulf Arab region, are available only with long delays.