Strong demand, state support to drive Islamic finance growth

Strong demand, state support to drive Islamic finance growth

Islamic finance, which has been forecast to reach $3.69 trillion by 2024 globally in terms of assets, will continue to expand on multiple fronts on the back of supportive government policies, strong product demand, and deeper market penetration despite pandemic challenges.All the three pillars of Islamic finance — Islamic banking, Sukuk and Takaful — are on track to sustain the growth trends with their penetration getting stronger across all key markets, in particular, the GCC."We expect Islamic finance to continue rising in 2021 and beyond, maintaining its now long-established growth trend. The industry generally remains underrepresented in countries with large Muslim populations, providing ample room to expand," said Ashraf Madani, a Moody's vice president and senior analyst.Penetration in the core Islamic financial markets of the GCC, Malaysia, Indonesia and Turkey rose to 32.8 per cent in September 2020, from 31.4 per cent in 2019 and 25.5 per cent in 2013, said the rating agency."We forecast global Sukuk issuance will stabilise in 2021 to around $190 billion-$200 billion, following record issuance of nearly $205 billion in 2020," said Madani.GCC sovereigns will increasingly turn to Sukuk issuance given high financing needs due to moderate oil prices and wide fiscal deficits. Corporate issuance,