Global Islamic economy to grow 3.1% to touch $2.4 trillion by 2024

State of the Global Islamic Economy Report forecasts five-year growth despite an 8% decline this year

The Petronas Twin Towers in Kuala Lumpur, Malaysia. The country retained its position as the world's biggest Islamic economy in the 2020-2021 State of the Global Islamic Economy Report. Getty Images

The global Islamic economy is forecast to grow at 3.1 per cent to $2.4 trillion by 2024 despite a decline in spending this year as a result of Covid-19, according to the latest State of the Global Islamic Economy Report.

Muslims spent $2.02tn on Islamic faith-inspired products in the food, pharmacy, cosmetics, fashion, travel and media/recreation sectors last year, reflecting a year-on-year growth of 3.2 per cent. This figure is set to decline by 8 per cent this year as a result of the pandemic, but all categories other than halal travel are expected to rebound to last year's level by the end of 2021, the report said.

"In these uncertain times, the Islamic economy, with its ethical and transparent ecosystem, remains a pillar of strength and a guarantee for a better future," Abdulla Al Awar, chief executive of the Dubai Islamic Economy Development Centre, said.

The State of the Global Islamic Economy is an annual study produced by research company Dinar Standard and supported by the DIEDC in partnership with Islamic portal Salaam Gateway. It details the size and levels of investment in different sectors of the Islamic economy.

It estimates the total value of Islamic finance assets globally grew by 13.9 per cent last year to $2.88tn and forecasts a compound annual growth of 5 per cent to $3.69tn by 2024. It said the halal food industry grew by 3.1 per cent to $1.17tn last year and predicted five-year growth of 3.5 per cent per year to $1.38tn.

The halal travel market grew at 2.7 per cent in 2019 to $194 billion, but is expected to fall to $58bn this year and not recover until 2023. It is still expected to achieve five-year compound annual growth of 1.4 per cent.

The modest fashion market was worth $277bn last year, Muslim spend on media and recreation was valued at $222bn, the halal pharmaceuticals market was worth $94bn and halal cosmetics valued at $66bn.

In terms of countries, Malaysia remained the biggest Islamic economy last year and Saudi Arabia moved up two places in the global rankings to the second place due to the strong performance of its Islamic finance sector, the report said. The UAE was the third-biggest Islamic economy, but had the biggest modest fashion and Islamic media and recreation markets, and the second-biggest Muslim-friendly travel and halal pharma and cosmetics sectors.

Sheikh Hamdan Bin Mohammed, Dubai Crown Prince and supervisor of Dubai's Capital of Islamic Economy Initiative, said the UAE had accumulated extensive expertise in the Islamic economy and established a robust FinTech infrastructure that places it in a strong position to become a global leader in developing the sector.

"We will build further on Dubai’s role as one of the world’s largest listing centres for sukuk, currently at $74.3bn, to support issuers, investors and all market participants in the Sharia’a-compliant financing sector,” said Hamad Ali, chief executive of Nasdaq Dubai, which hosted the launch of this year's report.

Investments made into Islamic economy businesses fell 13 per cent in 2019/20 to $11.78bn, the report found. Just over $9bn of these came through mergers and acquisitions, almost $2.3bn through venture capital-funded deals and $455m through private equity. The halal food sector attracted more than half of the total investment, or about $6.1bn.