GLOBAL Islamic finance assets are forecast to reach US$3.69 tril by 2024 according to the 2020 Islamic Finance Development Report by Refinitiv and the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IsDB).
In 2019, global Islamic finance assets increased by 14% year-on-year (yoy) to US$2.88 tril, the highest recorded growth for the industry since the global financial crisis, according to the 2020 Islamic Finance Development Report.
In addition, Islamic finance assets of Gulf Cooperation Council (GCC) reached US$1.2 tril in 2019, followed by Middle East and North Africa (MENA) at US$755 bil (excluding the GCC), and Southeast Asia at US$685 bil.
The Islamic banking sector contributes the bulk of the global Islamic finance assets as it grew 14% in 2019, equating to US$1.99 tril in global assets. This compares with just 1% growth in 2018 and an average annual growth of 5% from 2015 to 2018.
The report covers 135 countries and is based on five key metrics – quantitative development, knowledge, governance, awareness, and corporate and social responsibility (CSR).
According to the report, Malaysia, Indonesia, Bahrain, UAE and Saudi Arabia are ranked as the top five developed countries globally in Islamic finance.
This year, Indonesia clinched second place for the first time as it displayed one of the most notable improvements in the Islamic finance development indicator (IFDI), backed by government knowledge initiatives.
“This market is worth nearly US$3 trillion already and I’m excited about its future, particularly when it comes to Sukuk and because Islamic finance has so much in common with sustainable finance – one of the most significant trends in global business today,” CEO of Refinitiv David Craig commented.
After a cautious halt in the first quarter of 2020, the corporate sukuk issuance has also picked as companies are taking advantage of low borrowing costs to shore up their finances, while the pandemic continues to batter trade and economies.
Meanwhile, the lack of relevant and actionable data in Islamic finance has been an enduring challenge for the industry. Thus, the IFDI is now an important tool for policy makers and market participants.
“We believe that the analyses and information provided in this year’s report will serve as a vital reference point for 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 COVID19 pandemic,” said CEO of ICD Ayman Sejiny.
Despite several Islamic banks reported losses and reduced profits throughout this year, the pandemic has also led to growth in some areas of the industry as some regulators turned to Islamic finance to mitigate the economic impact. – Dec 11, 2020
