The data, released by the statistics office, compared with year-on-year growth of 4.6 percent and quarterly growth of 1.1 percent in the second quarter.

Gulf Arab economies have emerged from the global downturn this year on the back of higher oil prices, but Bahrain’s construction and real estate sectors have not yet returned to pre-crisis levels.

Its financial sector, which accounts for about a quarter of the economy, is only slowly picking up from the financial crisis and a regional property crash, and economic growth is being driven by the mining and manufacturing sectors.

Annual growth has come down from a 5.2 percent year-on-year rise in gross domestic product in the first quarter. Jarmo Kotilaine, chief economist at NCB Capital, said the slowdown was expected based on consumer and bank lending data that had pointed to a dip in investor confidence over the summer.

“It is not surprising. For much of the year the situation in the Gulf has been a bit fragile, and there was a retreat after the stronger start of the year. Now things have turned again,” he said.

In other Gulf countries the slowdown in economic growth could have been less pronounced as top energy exporters Saudi Arabia, Kuwait, Qatar and Abu Dhabi have more funds available to sustain economic growth, Kotilaine said.

“Elsewhere government spending is a factor that provides more continuity,” he said.

Most other countries in the Gulf do no publish quarterly GDP data.

Bahrain’s central bank forecasts full-year growth of 3-4 percent for this year and next year.