Higher oil prices, billions in Saudi investment and relative calm on the streets have also helped to restore some confidence in the regional trading and finance center, but no one is calling it an economic recovery just yet.

Protests, inspired by revolts in Egypt and Tunisia, may have been crushed. But discontent continues — though the only sign of them, which bankers heading to work in Manama may see is a convoy of police cars rushing by.

“The disruptions, to the extent that they can be measured in the financial markets, have been relatively manageable. One might even say they’ve been surprisingly modest,” said the chief economist at NCB Capital Bank, Jarmo Kotilaine.

The view on the island beyond the capital’s sparkling glass towers is not as bright but officials are trying to get “Business Friendly Bahrain” back on track after losing its Formula One Grand Prix, its flagship international event, to the violence this year.

There are signs they are succeeding.

After skyrocketing in March, the cost of insuring Bahraini sovereign debt has edged lower. Bahrain five-year credit default swaps (CDS) peaked at 350 basis points when the government cleared the streets of protesters. They are currently near 235 basis points but still higher than levels of below 200 before the unrest.

Local bankers also cite a pick-up in retail bank assets in the past three months as a good sign. But prices of goods and services shrank in March, April and May, while the main stock index is down 7.4 percent since February — compared to a 2.7 percent uptick in Dubai, just along the Gulf coast.

Bahrain, a modest oil producer, needs oil prices of around $100 per barrel to help balance the budget for its $22 billion economy, and may get help from robust oil prices currently above $108.

“Political damage was offset by high oil prices, so in terms of government finances as well, it is solid,” said one local banker. “I’m pretty optimistic.”

Earlier this month, approved a $16.44 billion budget for the next two years — a 44 percent rise in spending on subsidies and other public expenditures for a country with a population of 1.2 million.

Farouk Soussa, the Middle East chief economist at Citi in Dubai, said economic recovery would come in the form of Saudi investment in Bahrain’s public sector, or by the King donating its small Sunni neighbor a greater share of output from its Abu Saafa oil field. Riyadh currently gives Bahrain some 140,000 to 150,000 barrels per day.

Another crucial source of income, tourists coming over the causeway to the island from Saudi Arabia, appeared to be slowly recovering. Last week 150,000 visitors crossed into Bahrain, less than half the average but climbing now.

Hotels and malls, almost deserted on weekdays, have a modest buzz from GCC visitors on weekends. The seaside and a less rigorously religious social environment have long made the island popular with visitors from elsewhere in the Gulf.

Bahrain’s hotel and restaurant association said occupancy has been at 70 percent — though some observers question that.

Bahrain is also trying to assure investors — and the US, whose Fifth Fleet is based in the kingdom — that it is addressing the grievances of much of the population. The king has ordered a national dialogue to begin from July 1.

Investors are concerned that any economic recovery be accompanied by signs of improved political stability.

“The real question is, how do you make sure the country starts growing again and that benefits are spread evenly?” said NCB’s Kotilaine.

The answer appears grim from the Shiite villages ringing Manama’s financial haven.

Um Ahmed, 40, wiping sweat from her brow as she packed bags of sandwiches for relatives who have lost jobs, was anxious about how her community would recover.

“Everyone has someone who was sacked, someone jailed or missing. It’s a hard time, families have to pull together and spread what we have to get by,” she said, as children milled around her crumbling two-story home that houses the families of three siblings — around 24 people in all.

For now, economists are displaying caution. A Reuters poll released this week shows that they slashed estimates for 2011 gross domestic product growth to 2.7 percent, on average, from 3.4 percent seen in March. For 2012 it was cut to 3.3 percent from 3.6 percent.