Taking a bird’s eye view of the global Islamic finance industry, one might be tempted to view the sector as in decent health but stuck in a rut. Health-wise, total sharia-compliant assets grew by 8 per cent in 2023 (56 per cent of which comes from banking assets), according to data from S&P Ratings, compared with 9.4 per cent the previous year, with high-single digit growth once again forecast for the year to come.
This growth is impressive but concentrated. Financial institutions in the six-nation Gulf Cooperation Council are responsible for 86 per cent of all growth in 2023 — with Saudi Arabia alone accounting for 56.7 per cent — according to S&P. Indonesia, Turkey and Malaysia together accounted for most of the remaining growth, despite the depreciation of the Turkish lira and the Malaysian ringgit.
