Islamic Finance Industry Grows, Saudi Arabia Leads

The Islamic finance industry is set to experience growth globally in 2024-2025, with total assets expected to see single-digit growth driven by efforts in economic diversification. A recent report projected that sukuk issuance worldwide would range between $160 billion and $170 billion in 2024, maintaining a steady momentum from previous years.

According to S&P Global, the industry witnessed an 8% and 8.2% growth in 2023 and 2022, respectively, primarily fueled by the expansion of banking assets and the sukuk industry. Islamic banking assets grew by 56% in 2023, with financial institutions in the Gulf Cooperation Council region contributing significantly to this increase.

The report highlighted that Saudi Arabia, with its Vision 2030 implementation, played a crucial role in supporting the Islamic finance industry, along with the UAE showing a strong performance in 2023. Other countries like Turkiye and Indonesia also saw growth, although Malaysia and Turkiye faced challenges due to currency depreciation.

In 2024, the issuance of Shariah-compliant debt products began robustly, with Saudi Arabia emerging as a key player. The sukuk market is expected to continue its growth momentum, especially in core Islamic finance countries like Saudi Arabia, to meet high financing needs driven by economic transformation programs.

While digitalization and sustainability initiatives have shown mixed results in the industry, the future of Islamic finance is envisioned as sustainable, collaborative, and digital. The alignment of Shariah principles with sustainability goals and the industry's value proposition are seen as key drivers for its sustainable growth.

Overall, the Islamic finance industry is poised for continued expansion, leveraging digitalization and collaboration to enhance efficiency and value for investors and issuers in the years to come.