GCC drives global Islamic finance growth to $3trln

GCC drives global Islamic finance growth to $3trln

Driven by favourable dynamics in the GCC and a few other core markets, the size of the global Islamic finance industry is poised to cross the $3.0 trillion mark this year, growing by around 10 per cent after expanding at a similar pace in 2022, S&P Global Ratings said.

In 2022, GCC countries drove most of the growth in banking assets. Similarly, Malaysia and GCC countries accounted for a large portion of the sukuk market during the same period.

In a report titled “Islamic Finance 2023-24: Growth beyond core market remains market remains elusive,” S&P’s primary credit analyst Mohamed Damak said while sukuk issuance will likely continue to decline in 2023, new issuances are expected to exceed maturities with sustainability-linked sukuk issuances continuing to increase, albeit from a low base.

The GCC countries — notably Saudi Arabia and Kuwait — largely fuelled this performance, supported by a large, one-off acquisition in the latter. Elsewhere, growth was either muted or held back by local currency depreciation. this was mainly due to Kuwait Finance House’s (KFH’s) acquisition of Ahli United Bank.

S&P forecasts a material slowdown in GCC economies’ real GDP growth in 2023-2024, compared with 2022, largely based on lower oil production. “However, we think