The world has seen rapid growth in the Islamic finance market because of the strong investments in halal sectors and services.
According to the Islamic Finance Development Report, experts predict Global Islamic Finance assets to reach $ 3.69 trillion by 2024. The report stated that global Islamic Finance assets are going up moderately by 14% year by year. It comprised $2.88 trillion in 2019. The report mentions Malaysia, Indonesia, Bahrain, UAE, and Saudi Arabia as the top 5 developed countries concerning Islamic Finance. In 2020, Indonesia represented the most significant advancements in the Islamic Finance Development Indicator (IFDI). For the first time, the improvements brought Indonesia into the second place considering good knowledge and awareness ranking on Islamic Finance.
Islamic Finance sector’s total worth is distributed across its three main sectors: banking, capital markets, and takaful. Indeed, the most important and largest sector is Islamic banking in the Islamic Finance industry. It contributes to 71%, or $1.72 trillion, of the industry’s assets. Moreover, the sector increased by 14% in 2019, equating to USD 1.99 trillion in global assets. Islamic banking is supported by commercial, wholesale, and different types of banks. However, commercial banking is one of the main contributors to the sector’s growth.
Recent years have witnessed significant growth in different sectors of Islamic Finance. For instance, Sukuk issuance increased by $ 130.5bn in 2020 and $127.3bn in 2019 despite pandemics. The report indicates that companies take advantage of low borrowing costs to shore up their finances while the pandemic continues to batter trade and economies.
Expert Ideas on Islamic Finance Growth
David Craig, CEO of Refinitiv, said, “A lack of relevant, actionable data has held back the Islamic finance industry for too long. That’s why the Islamic Finance Development Indicator is now such an important tool for policymakers and market participants. This market is worth nearly $3 trillion already. I’m excited about its future. Particularly, when it comes to Sukuk. And because Islamic finance has so much in common with sustainable finance. It is one of the most significant trends in global business today.”
Ayman Sejiny, the CEO of ICD, said: “We believe that the analyses and information provided in this year’s report will serve as a vital reference point for the state of the Islamic finance industry. during these difficult times, and we remain convinced that Islamic finance can play a major role in alleviating the social and economic consequences of the COVID-19 pandemic.”
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