The Covid-19 pandemic has devastated the global economy, with many countries facing record inflation levels and rising interest rates. Despite this, the Islamic finance industry has been thriving, registering double-digit growth of 10.6% at the height of the pandemic.
This begs the question: why does Islamic finance continue to grow, and how is it projected to develop in 2023?
The growth of Islamic finance is primarily attributed to the principles it’s based on, such as its prohibition on interest, its focus on equitable profit and loss-sharing arrangements, its commitment to transparency, its potential to protect economic stability, its encouragement of social responsibility, its market growth potential, and its popularity among a quarter of the world’s population.
Islamic finance assets are projected to grow at a compound annual growth rate of 5% over the next five-year stretch, reaching a cumulative valuation of US$3.5 trillion by 2024.
The Islamic finance sector is also expected to benefit from an increase in the number of Sukuk issuances – Islamic bonds designed to produce returns for investors while staying in line with Islamic law – which is expected to grow at a compound annual growth rate (CAGR) of nearly 7% over the next few years, eventually climbing to a cumulative valuation of US$257 billion by 2026.
The Takaful market is also expected to experience a lot of growth, expanding at a base rate of 5%-10%. Additionally, the Islamic fund industry is also likely to increase consumer interest as investors come to understand its benefits.
Islamic finance still has untapped opportunities, such as halal blockchains and shariah-compliant cryptocurrencies that can help increase its scope of utilization and adoption, as well as improve accountability, efficiency, security, and accessibility.
Would you like to learn more about shariah-compliant digital money? Check out Islamic Coin by visiting their website – https://islamiccoin.net/
Twitter: https://twitter.com/Islamic_coin
Telegram: https://t.me/islamiccoin_int
Discord: https://discord.gg/islamic-coin
This article first appeared on Yahoo! Finance. The author, LuckyJaff, is an ambassador of Islamic Coin.
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