Global Islamic finance expected to climb by 12pc.

Byline: AHSAN NISAR

Islamic banking's market share likely to move up in Pakistan

Global outlook

Islamic financing emerged 50 years ago, in countries with large Muslim populations who were keen to ensure their sources of funding were governed by the requirements of Shariah and the principles of Islam. In 2019, Islamic finance assets amounted to US$2.88 trillion, the highest recorded growth for the industry since the global financial crisis. The prospects look positive: by 2024, this is set to rise to US$3.69 trillion. While Muslim countries have turned to Shariah financing to fund their thirst for capital, another underlying reason for its popularity is that Shariah financing is beginning to broaden its appeal among non-Muslim countries too.

The $2.2 trillion global Islamic finance industry is expected to grow 10 to 12% over 2021-2022 due to increased Islamic bond issuance and a modest economic recovery in the main Islamic finance markets. 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 the growth of 17.3% 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. 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 last year are also expected to support growth. On the other hand, there is pressure on real estate developers, given the drop in real estate prices in the GCC (Gulf Cooperation Council) and building risks in the...