KUALA LUMPUR (Sept 14): S&P Global Ratings highlighted global issuance of sukuk in the first half of 2017 was good, but expects it to moderate in 2018 as the Islamic finance industry has moved into a “new normal” of slow growth.
“We think that 2018 is less certain, as we don't see some of the large issuances of last year repeating next year," Dr. Mohamed Damak, senior director and global head of Islamic finance at S&P Global Ratings said, after noting the accelerated issuance of sukuk in the first half of this year.
Among some of the downside trends relating to Islamic finance includes subdued economic performance in Islamic finance core countries, primarily due to low oil prices, as well as fragmentation and lack of integration by business line and geographical issues that impede growth. While there were some positive strides seen in the past few months, the absence of a strong response to the long-standing debate about standardisation will continue to stymie the industry.
Nonetheless, the Islamic finance is said to have much to offer to the world’s economy.
In a report entitled “Islamic Finance 2018: Slow Growth Is The New Normal” published today, S&P Global Ratings expects the industry to lose momentum in 2018.
"We see a natural connection between Islamic finance principles, responsible finance, Sustainable Development Goals and impact investing. All aim to create a more equitable financial system that has a positive tangible impact on the economy and population," Damak added.
The contribution of Islamic finance has so far been limited by the industry's relatively small size and structure.