According to a report by LSEG, Islamic finance is growing significantly and is expected to reach US$6.67 trillion by 2027. This growth is driven by the global Muslim population’s demand for Shariah-compliant financial products and services. However, where is this expansion happening most quickly? Let’s explore five countries that are at the forefront of Islamic financing.
The Powerhouses of Islamic Finance
Several countries consistently rank at the forefront of Islamic finance growth. These countries have demonstrated strength in well-developed regulatory frameworks, a large Muslim population base, and a commitment to innovation within the sector.
Indonesia
Indonesia, with the world’s largest Muslim population, offers a significant market for Islamic finance. The country’s economy has also been experiencing steady growth, averaging a Gross Domestic Product (GDP) Compound Annual Growth Rate (CAGR) of 3.8% over the past five years. This strong economic foundation positions Indonesia as a potential major player in the industry.
Qatar
Qatar’s strategic location and strong financial infrastructure make it a hub for innovation in Shariah-compliant financial products. The country’s Islamic finance sector has historically shown impressive growth despite the overall GDP averaging a 1.0% CAGR over the past five years.
Saudi Arabia
Saudi Arabia stands as the world’s leading market in Islamic finance. The country’s GDP has grown at a steady CAGR of 2.0% over the past five years, providing a strong economic foundation for Islamic financial services. This dominant position is further solidified by its significant share of global Islamic banking assets, which makes it qualify as the most mature market.
Malaysia
Malaysia has a long history and well-developed Islamic finance infrastructure. With a CAGR of 3.3% for its GDP over the past five years, Malaysia’s economy shows consistent growth. It presented continued growth in the sector including a significant state-guaranteed Sukuk issuance in 2024.
United Arab Emirates
The United Arab Emirates is a leader in Islamic finance. It established the world’s first modern Islamic bank in 1975 and holds a significant share of the country’s banking assets. The UAE’s economy has also shown consistent growth, with a CAGR of 2.6% for its GDP over the past five years.
While established players like these five countries remain major forces, new markets such as Australia are emerging as promising prospects. With a Muslim population of over 800,000, Australia has a potentially untapped market valued at $250 billion. Recognizing this opportunity, Hejaz has positioned itself at the forefront of capturing this market by becoming Australia’s leading Islamic financial services provider.
Our mission is to be a pioneer in bringing Islamic finance to non-Muslim majority countries. We aim to facilitate access to Shariah-compliant products, empowering Muslims to manage their finances according to their faith and values. For more information about Hejaz and our products, don’t hesitate to contact us or explore our website.
GDP CAGR Source: https://www.worldeconomics.com/Countries-With-Highest-Growth/Indonesia.aspx