International Islamic finance forecast to expand as major markets recover – S&P

The $2.2 trillion world-wide Islamic finance marketplace is predicted to mature 10%-12% above 2021-2022 because of to enhanced Islamic bond issuance and a modest economic recovery in the most important Islamic finance marketplaces, S&P Global Ratings stated.

The field continued to develop final year even with the COVID-19 pandemic, even though at a decrease rate than in 2019, with world-wide Islamic belongings growing by 10.6% in 2020 from progress of 17.3% the previous 12 months.

Islamic finance, which bans curiosity payments and pure monetary speculation, has been on the increase for numerous yrs throughout markets in Africa, the Center East and Southeast Asia, but it continues to be a fragmented field with uneven implementation of its rules.

“More than the future 12 months, we could see progress on a unified worldwide authorized and regulatory framework for Islamic finance … we consider that this kind of a framework could enable solve the absence of standardisation and harmonisation that the Islamic finance marketplace has confronted for many years,” S&P said on Monday.

The industry is expected to acquire some support in the coming two yrs in Saudi Arabia, wherever home loans and corporate lending are predicted to increase as the country pushes in advance with strategies to diversify the economic system.

Investments in Qatar for the 2022 soccer Environment Cup and the Expo party in Dubai afterwards this calendar year are also expected to assistance development.

The ratings company forecast world wide issuance of Islamic bonds, or sukuk, to access $140-155 billion this year, up from roughly $140 billion in 2020, thanks to plentiful liquidity and sustained funding demands among corporates and governments.

S&P also highlighted that the full effect of the coronavirus disaster has nonetheless to materialise and much more requests for sukuk restructurings and maturity extensions, as effectively as higher default fees, are anticipated this calendar year.

“We see tension on serious estate builders, given the fall in real estate rates in the GCC (Gulf Cooperation Council) and building hazards in the industrial real estate sector,” S&P stated.

“Equally, businesses connected to aviation, tourism, journey, and hospitality – sectors that have been severely hit by COVID-19 – will consider various quarters to recover to prepandemic degrees.”

Our Criteria: The Thomson Reuters Believe in Concepts.