According to "Islamic Finance Market Report 2024" published yesterday on Research and Market, the growth observed in the historic period can be attributed to several factors such as the increasing demand for Sharia-compliant products and practices, the stimulation of fresh interest due to substantial oil wealth, the emphasis on risk-sharing in financing, strong investments in halal sectors, and the expansion of Islamic banking services.

 According to the report, the Islamic finance market size is expected to see rapid growth in the next few years. It will grow to $12.45 billion in 2028 at a compound annual growth rate (CAGR) of 11.7 percent. 

The growth anticipated for the forecast period can be attributed to several factors such as the expansion of the Islamic finance industry, the increasing Muslim population, a focus on ethical and socially responsible investing, government support and regulation, and the globalization of Islamic finance. 

Key trends expected during this period include the adoption of electronic modes for all products and services, innovation in financial products, the launch of new Islamic exchange-traded funds (ETFs), growing popularity of ESG-related financial assets, and the integration of financial technology.
 
 The growth of the Muslim population is expected to drive the expansion of the Islamic finance market. This increase in population is largely due to high fertility rates and a relatively young demographic. 

Muslims turn to Islamic finance to manage their financial needs in accordance with shariah law, which prohibits interest and promotes ethical, risk-sharing financial practices. 

This ensures that their financial activities align with their religious beliefs and values. Growing Muslim population is contributing to the growth of the Islamic finance market.

 Prominent companies in the Islamic finance sector are focusing on innovation in financial products, such as digital banking platforms, to gain a competitive edge. 

These platforms enable customers to manage accounts, conduct transactions, and access financial products online or via mobile applications.

Middle East and Africa was the largest region in the Islamic finance market in 2023. Asia-Pacific is expected to be the fastest-growing region in the market. 

The countries covered in the Islamic finance market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The assets of the world's Islamic banks expanded rapidly to reach USD 3.24 trillion by end of 2022 up from USD 1.3 trillion by 2012. The number of full-fledged Islamic banks rose by 36% to 336 in 2022 while conventional banks with Islamic windows or services increased by 84% to 274 in 2022. The highest growth in Islamic banking in the past decade was in Saudi Arabia, the United Arab Emirates and Iran that capitalised on improvement of its local currency in the early years. 

Islamic finance has been growing consistently, with the total value of Islamic financial assets projected to surpass $4 trillion by 2030. 

Key markets in the Middle East, Southeast Asia (especially Malaysia and Indonesia), and Africa will continue driving this growth. New markets, such as Central Asia and Europe, are also showing interest in adopting Islamic finance principles.

Sukuk (Islamic bonds) are gaining traction as a preferred financing tool for infrastructure projects and green initiatives. 

Governments and corporations are issuing sukuk to tap into both Islamic and conventional investors seeking ethical and sustainable investment opportunities.

The adoption of technology, including blockchain, artificial intelligence, and digital banking, is transforming Islamic finance. 

Fintech solutions are making Islamic financial services more accessible, especially to underserved populations in emerging markets.

Africa is emerging as a significant market for Islamic finance, driven by a growing Muslim population, infrastructure development needs, and supportive government policies. 

Countries like Nigeria, South Africa, and Kenya are positioning themselves as regional Islamic finance hubs.

Global Islamic finance is poised for a bright future, driven by its ethical foundation, alignment with sustainable development goals, and increasing adoption of digital technologies. 

As the industry continues to innovate and expand into new markets, it has the potential to become a cornerstone of the global financial system.