KEY HIGHLIGHTS

  • The global Islamic Economy is represented by US$ 2.02 trillion in halal consumer spend (Dinar Standard) and US$ 2.88 trillion of Islamic Finance assets (Refinitiv)
  • Islamic finance globally is projected to grow at a 5% CAGR to reach $3.69 trillion by 2024
  • Malaysia, Saudi Arabia and UAE are the top 3 Islamic economy leaders, with Australia ranking 31st
  • Australia represents an attractive growth opportunity for Islamic finance, given its untapped Muslim customer base with a A$56 billion Islamic superannuation pool and a A$192 billion Islamic residential finance opportunity.

The Annual State of the Global Islamic Economy Report salaamgateway (SGIE) is the go-to reference for investors, entrepreneurs and industry executives for everything Islamic/ Halal related.

Supported by the Dubai Islamic Economy Development Centre and first launched in November 2013 by Thomson Reuters, the report and its associated Global Islamic Economy Indicator has become the benchmark for governments, corporates and private sector multinationals and SMEs alike. In its eight-year of publication, their recent 2020/2021 report was just launched across 14 major cities globally, including New York, Dubai, Kuala Lumpur, Jakarta, and Sydney.

For the second year, DinarStandard is fully driving the production of the Report with Refinitiv (formerly ThomsonReuters) serving as the Islamic Finance data partner.

The report has global reach exceeding 100,000 readers across 85 countries, with substantial media coverage including CNN, BBC, and Wall Street Journal; offering detailed insights into global market sectors such as Food, Fashion, Travel, Pharma, Cosmetics, Finance, Media & Recreation.

What is the Islamic Economy?

According to the report, the Islamic Economy refers to “sectors whose core products/ services are structurally affected by Islamic ethics and law”.

Islamic law, underlying the notion of “halal” or permissible, directly impacts the core products and services offered in a number of economic sectors, including food, finance, clothing, tourism, media and recreation, pharmaceuticals, and cosmetics. The sectors included in the scope of the Islamic economy definition include Halal food, modest fashion, Halal tourism, Sukuk, Halal cosmetics and halal pharmaceuticals, and finally Islamic Finance and investment. While other sectors such as education and philanthropy are impacted by Islam’s values and principles, these are not in the scope of the report.

Why is it important?

There are more than 1.9 billion Muslims in the world, approximately 1/4th of the world’s population. What’s more exciting is that the Muslim population growth is double that of the world’s population, reaching 3 billion by 2060. Muslims are also younger than the rest of the world, with approximately 60% aged 15-59 and 24% under 15 years of age.

Globally, Muslim consumer spending is increasingly pushing for halal products and services, with a 2018 Pew Research Center finding that Muslims widely rate religion as being ‘very important’ in their lives while only 54 percent of the general population shares the same opinion. In some largely Muslim countries such as Pakistan Jordan, Malaysia, Saudi Arabia, and Indonesia, 90% of Muslims consider religion very important in their life.

As such, developing products, services and solutions that cater to Muslims unique view of the world, including the inherent ethics associated with Islamic principles, is a significant opportunity for the coming decade. Indeed, the emphasis on ethics are a common denominator shared with the rise in ethics in the Western world. With the rise of ethical consumerism, many halal brands have attracted both Muslim and non-Muslim consumers, from halal organic brands such as Saffron Road to ethical finance platforms such as Arabesque.

Countries around the world, from the United Kingdom in the west to Indonesia in the east are all placing high policy priority to cater to the Islamic economy sectors, including the establishment of whole government departments to steer their Islamic economy strategies. Malaysia, Saudi Arabia, the United Arab Emirates and Indonesia, are notable examples of countries that are specifically focused on growing these segments. Their position at the top of the Islamic Economy indicator suggests that they are actively competing with each other and beyond to lead, activate and attract their Islamic economy sectors.

How is it growing?

As with almost every other sector, the Covid pandemic has placed a momentary dent in growth rate in 2020, with Islamic travel being the worst hit. However, growth will bounce back in 2021, with the halal food sector projected to grow at 3.5% and the Islamic finance sector at 5% annually all the way to 2024.

Why is it important to Australia?

Australia ranks 31st in the global Islamic economy indicator and ranks 15th specifically for halal food exports. Its meat production – particularly cattle and sheep, is highly prized in key Muslim market import regions such as the Middle East and South East. In addition, more than 565,000 million Muslim tourists entered Australia in 2019. Clearly, there is a significant opportunity to address these unique customers that are considering Australian goods and services.

For the second year in a row, Managing Director of Crescent Wealth Super Talal Yassine was delighted to be the host of the Australian launch. In addition, we supported the Dinar Standard with the research for the report’s feature piece on ‘Australia: The strong performance $250 billion dollar Islamic Finance industry uncovered’. The launch

The Australian launch follows a series of worldwide events broadcast live from over 12 countries around the world including the UAE, Indonesia, Malaysia, Morocco, Spain, Nigeria, India, Singapore, USA, UK, Turkey, and Japan.

Various Islamic Investment and consumer behaviour complex ecosystem topics were addressed during the Australian sgie report launch webinar event. Such as Muslim spending, Islamic lifestyle, Australian Muslim Entrepreneurship and venture capital assisting Muslim owned and run start-ups across the lifestyle sector, fintech, modest fashion, e-commerce

 

What about Islamic finance and shariah-compliant investment?

The report features the opportunity in Islamic retirement funds and Islamic residential finance as unique and underserved segments.

With a Muslim population nearing ~800,000, the report estimates that there is a demand for Islamic retirement funds of A$56 billion, and another A$192 bln for Islamic residential finance. The Muslim population is also relatively young, with 82% under the age of 45, and almost half aged 24 or under, suggesting this demand is only likely to rise in the coming years.

At Crescent Wealth super, as the first Islamic financial institution in Australia, we look forward to supporting the sustainable development of these critical insights that help provide transparency and visibility to the Australian opportunity for Islamic compliant products.

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Download the full ‘State of the Global Islamic Economy report 2020-21

Download the report excerpt on ‘Australia: The $250 billion Islamic finance market uncovered’

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