Covid-19 offers an opportunity to transform Islamic finance
The global Islamic finance industry will return to slow growth in 2020-2021 after strong performance in 2019 underpinned by a more dynamic sukuk market, S&P Global Ratings said today (see report).
“The significant slowdown of core Islamic finance economies in 2020, because of measures implemented by various governments to contain the COVID-19 pandemic, and the expected mild recovery in 2021, explain our expectations,” said S&P Global Ratings head of Islamic finance Mohamed Damak.
At the same time, we see an opportunity in the current environment for accelerating and unlocking the long term potential of the industry. Stakeholders are realizing the importance of standardization as government coffers are depleted and access to sukuk remains time consuming and more complicated than conventional instruments.
Lockdown measures have also shown the importance of leveraging technology and creating a nimbler industry. Furthermore, industry players have been discussing the potential use of social instruments to help companies and individuals economically affected by the pandemic.
“With the right coordination between different Islamic finance stakeholders, we believe the industry could create new avenues of sustainable growth that serve the markets,” Mr. Damak concluded.