Global Islamic finance forecast to grow as main markets recover, S&P says


  • Banking
  • Monday, 03 May 2021

Islamic finance has been on the rise for many years across markets in Africa, the Middle East and Southeast Asia.

DUBAI: The $2.2 trillion global Islamic finance industry is expected to grow 10%-12% over 2021-2022 due to increased Islamic bond issuance and a modest economic recovery in the main Islamic finance markets, S&P Global Ratings said.

The industry continued to grow last year despite the COVID-19 pandemic, although at a lower pace than in 2019, with global Islamic assets expanding by 10.6% in 2020 against growth of 17.3% the previous year.

Islamic finance, which bans interest payments and pure monetary speculation, has been on the rise for many years across markets in Africa, the Middle East and Southeast Asia, but it remains a fragmented industry with uneven implementation of its rules.

"Over the next 12 months, we could see progress on a unified global legal and regulatory framework for Islamic finance... we believe that such a framework could help resolve the lack of standardisation and harmonisation that the Islamic finance industry has faced for decades," S&P said on Monday.

The industry is expected to receive some support in the coming two years in Saudi Arabia, where mortgages and corporate lending are expected to rise as the country pushes ahead with plans to diversify the economy.

Investments in Qatar for the 2022 soccer World Cup and the Expo event in Dubai later this year are also expected to support growth.

The ratings agency forecast global issuance of Islamic bonds, or sukuk, to reach $140-155 billion this year, up from roughly $140 billion in 2020, thanks to abundant liquidity and sustained financing needs among corporates and governments.

S&P also highlighted that the full impact of the coronavirus crisis has yet to materialise and more requests for sukuk restructurings and maturity extensions, as well as higher default rates, are expected this year.

"We see pressure on real estate developers, given the drop in real estate prices in the GCC (Gulf Cooperation Council) and building risks in the commercial real estate sector," S&P said.

"Similarly, companies related to aviation, tourism, travel, and hospitality - sectors that have been severely hit by COVID-19 - will take several quarters to recover to prepandemic levels." - Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

   

Next In Business News

Cagamas concludes issuance of RM1.09bil bonds, sukuk
Bursa Malaysia aims for 300 PLCs to participate in transformation programme by 2025
Oil prices climb after Opec+ keeps output cut targets, China eases Covid curbs
Chinese snack maker Weilong Delicious aims to raise up to US$141mil in trimmed-down Hong Kong IPO
Yuan jumps past 7 per dollar as China eases some Covid curbs
Foxconn expects Covid-hit�China plant�back to full output in late Dec-early Jan�-source
Mestron secures RM10mil order from Singapore's Tamaco
FBM KLCI remains on a slide while region picks up on China's easing lockdown
Bursa Malaysia emphasises digitalisation, nation building for PLCs
TNB calls for global collaboration in journey towards a sustainable future

Others Also Read