The Islamic finance sector will expand globally by 10% by 2024

The global Islamic finance industry is poised for robust growth, with projections indicating a steady expansion of around 10 per cent in the coming years, specifically in the period 2023-2024. This optimistic outlook comes despite the prevailing economic slowdown, underscoring the resilience and dynamism of Islamic finance. The findings, outlined in a comprehensive report by S&P Global Ratings, shed light on the industry's performance in 2022, which witnessed a commendable 9.4 per cent growth in assets. Notably, this growth follows a similarly impressive expansion of 12.2 per cent in 2021, signalling a sustained upward trajectory.

Key drivers of this growth, as highlighted in the report, include the active participation of Gulf Cooperation Council (GCC) countries. These nations, with their burgeoning Islamic finance sectors, played a pivotal role in propelling the industry forward. The report underscores the significance of the Gulf countries, particularly in the context of banking assets and the sukuk industry, as primary contributors to the overall growth. The continued expansion in these regions has positioned them as key players in the global Islamic finance landscape. However, the report also acknowledges certain structural weaknesses that still constrain the industry's broader geographical and market appeal. These challenges, while not hindering current growth, emphasize the need for ongoing efforts to address underlying issues. By addressing these structural weaknesses, the industry can enhance its resilience and attractiveness on a wider scale, potentially tapping into new markets and demographics.

One notable aspect highlighted in the report is the role of corporations in driving issuance volumes, with a specific emphasis on countries like Saudi Arabia. Governments in such nations have unveiled ambitious transformation plans, and corporations are expected to actively contribute to the issuance volumes in line with these transformative agendas. This indicates a symbiotic relationship between government-led initiatives and private-sector participation, fostering a conducive environment for Islamic finance to thrive.

Saudi Arabia, in particular, emerges as a noteworthy player in this narrative, showcasing the potential for Islamic finance to align with broader economic transformation strategies. As governments in the region actively promote economic diversification and innovation, corporates are likely to play a pivotal role in shaping the financial landscape. This collaboration between government vision and corporate participation reflects a strategic synergy that can drive sustainable growth in the Islamic finance sector.

In conclusion, the S&P Global Ratings report paints a positive picture for the global Islamic finance industry, projecting a double-digit growth rate despite economic headwinds. The role of GCC countries, especially Saudi Arabia, and the anticipated contribution of corporates underscore the industry's adaptability and its ability to align with broader economic agendas. While challenges persist, addressing structural weaknesses will be crucial in ensuring the industry's sustained growth and expanding its reach to new markets in the years to come.