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Global Islamic Finance to grow by 12% in 2021-22: S&P

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The growth will be driven by increased sukuk issuance in key markets

Global Islamic Finance is set to grow by 12 percent during 2021 and 2022, after slowing down to 10.6 percent in 2020, according to S&P Global Ratings. The growth of Islamic Finance this year and the next will be driven by increased sukuk issuance in key markets.

Sukuk issuance across the globe this year is forecasted to increase by $140 billion to $155 billion, the report said. Sukuk issuance dropped in 2020 to $139.8 billion due to the coronavirus pandemic from $167.3 billion in 2019.

In its report, S&P said, “We expect an increase in the volume of issuances this year as liquidity remains abundant, corporates and sovereigns come back to the market, and new issuances exceed maturing sukuk. In the first quarter of 2021, issuance volumes were up by 1.4 percent in total and 22 percent if Sukuk re-openings (issuances under existing structures) are excluded.”

It further said, “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.”

“Although we expect a modest recovery for most core Islamic finance countries in 2021-2022, we think that the sector will expand against the backdrop of continued standardisation and integration.”

In the last decade, we have witnessed Islamic Finance gaining prominence across markets in Africa, the Middle East and Southeast Asia.

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