The global Islamic finance industry will grow at a slower pace as sukuk volumes shrink and core markets grapple with economic slowdowns caused by Covid-19 pandemic, S&P Global Ratings said.
The $2.4 trillion (Dh8.81tn) Sharia-compliant finance industry is expected to register “low to mid-single-digit growth” this year and in 2021, the credit rating agency said in a report yesterday.
The industry registered strong growth of 11.4 per cent last year on the back of sukuk issuance that was higher than expected.
“The significant slowdown of core Islamic finance economies in 2020, because of measures implemented by various governments to contain the Covid-19 pandemic, and the expected mild recovery in 2021, explain our expectations,” Mohamed Damak, senior director and global head of Islamic Finance at S&P, said.
S&P said the volume of Islamic bond issuance will drop to $100 billion this year, from $162bn reported last year when Turkey, GCC issuers, Malaysia and Indonesia supported the market.
The agency did not specify its issuance expectations for next year but said that the pandemic and lower oil prices clouded the outlook for the global sukuk market, which will continue to remain on a downward trajectory in 2020 and 2021.
“Amid tougher conditions, we also don’t see core Islamic finance countries using sukuk as a primary source of funding, despite their higher financing needs,” Mr Damak said.
“However, we think that Turkey might try to tap the market aggressively in 2020 to use all of its available funding options.”
The Covid-19 outbreak has killed more than 433,000 people and infected about 8 million people around the world, according to Johns Hopkins University, which is tracking its spread. It has also forced governments to close borders and shut all but essential businesses, bringing economic activity to a halt.
Most of the major economies are now reopening gradually, four months after the World Health Organisation declared Covid-19 a pandemic.
However, the rate of infection is still rising in some emerging and developing economies, which, in turn, is derailing efforts to fully reopen borders.
The short-term outlook for economic recovery remains bleak as the world economy faces its worst recession this year since the Second World War.
Earlier this month, the Organisation for Economic Co-operation and Development projected that global output would contract 7.6 per cent this year in the absence of a vaccine.
The World Bank forecast that global output would shrink by 5.2 per cent, while the International Monetary Fund on Monday said it expects to lower its April forecast of a 3 per cent contraction in global economic activity on June 24, when it releases its latest projections.
However, despite headwinds, S&P expects total assets of Islamic banks and financial institutions around the world to remain stable or record low single-digit growth this year and next, after a strong growth in 2019.
The total assets of Islamic institutions grew by 6.6 per cent last year, underpinned by the strong performance of financial institutions in the GCC.
The credit rating agency said in April that banks in the Gulf, including Islamic lenders, would be able to navigate the current downturn, thanks to their strong earning capacity.
Buffers developed during healthier times by banks in the region could help them take a combined hit of $36bn due to Covid-19, before moving into the red.
Meanwhile, the takaful, or Sharia-compliant insurance, sector is expected to expand at mid to high single-digit rates, while the funds industry might be affected by the aftereffects of market volatility.
“Overall, we believe low to mid-single-digit growth for the overall industry is a fair assumption over the next two years,” Mr Damak said.
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
THE BIO
Favourite car: Koenigsegg Agera RS or Renault Trezor concept car.
Favourite book: I Am Pilgrim by Terry Hayes or Red Notice by Bill Browder.
Biggest inspiration: My husband Nik. He really got me through a lot with his positivity.
Favourite holiday destination: Being at home in Australia, as I travel all over the world for work. It’s great to just hang out with my husband and family.
Wonka
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Match info
Athletic Bilbao 0
Real Madrid 1 (Ramos 73' pen)
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Difference between fractional ownership and timeshare
Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
Like a Fading Shadow
Antonio Muñoz Molina
Translated from the Spanish by Camilo A. Ramirez
Tuskar Rock Press (pp. 310)
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GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
The specs
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Power: 181hp
Torque: 230Nm
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England v South Africa schedule:
- First Test: At Lord's, England won by 219 runs
- Second Test: July 14-18, Trent Bridge, Nottingham, 2pm
- Third Test: The Oval, London, July 27-31, 2pm
- Fourth Test: Old Trafford, Manchester, August 4-8
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
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Price: From Dh439,000
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match info
Chelsea 2
Willian (13'), Ross Barkley (64')
Liverpool 0
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Eyasses squad
Charlie Preston (captain) – goal shooter/ goalkeeper (Dubai College)
Arushi Holt (vice-captain) – wing defence / centre (Jumeriah English Speaking School)
Olivia Petricola (vice-captain) – centre / wing attack (Dubai English Speaking College)
Isabel Affley – goalkeeper / goal defence (Dubai English Speaking College)
Jemma Eley – goal attack / wing attack (Dubai College)
Alana Farrell-Morton – centre / wing / defence / wing attack (Nord Anglia International School)
Molly Fuller – goal attack / wing attack (Dubai College)
Caitlin Gowdy – goal defence / wing defence (Dubai English Speaking College)
Noorulain Hussain – goal defence / wing defence (Dubai College)
Zahra Hussain-Gillani – goal defence / goalkeeper (British School Al Khubairat)
Claire Janssen – goal shooter / goal attack (Jumeriah English Speaking School)
Eliza Petricola – wing attack / centre (Dubai English Speaking College)
COMPANY%20PROFILE
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Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
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Stage result
1. Jasper Philipsen (Bel) Alpecin-Fenix 4:42:34
2. Sam Bennett (Irl) Bora-Hansgrohe
3. Elia Viviani (Ita) Ineos Grenadiers
4. Dylan Groenewegen (Ned) BikeExchange-Jayco
5. Emils Liepins (Lat) Trek-Segafredo
6. Arnaud Demare (Fra) Groupama-FDJ
7. Max Kanter (Ger) Movistar Team
8. Olav Kooij (Ned) Jumbo-Visma
9. Tom Devriendt (Bel) Intermarché-Wanty-Gobert Matériaux
10. Pascal Ackermann (Ger) UAE Team Emirate
The%20new%20Turing%20Test
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The Facility’s Versatility
Between the start of the 2020 IPL on September 20, and the end of the Pakistan Super League this coming Thursday, the Zayed Cricket Stadium has had an unprecedented amount of traffic.
Never before has a ground in this country – or perhaps anywhere in the world – had such a volume of major-match cricket.
And yet scoring has remained high, and Abu Dhabi has seen some classic encounters in every format of the game.
October 18, IPL, Kolkata Knight Riders tied with Sunrisers Hyderabad
The two playoff-chasing sides put on 163 apiece, before Kolkata went on to win the Super Over
January 8, ODI, UAE beat Ireland by six wickets
A century by CP Rizwan underpinned one of UAE’s greatest ever wins, as they chased 270 to win with an over to spare
February 6, T10, Northern Warriors beat Delhi Bulls by eight wickets
The final of the T10 was chiefly memorable for a ferocious over of fast bowling from Fidel Edwards to Nicholas Pooran
March 14, Test, Afghanistan beat Zimbabwe by six wickets
Eleven wickets for Rashid Khan, 1,305 runs scored in five days, and a last session finish
June 17, PSL, Islamabad United beat Peshawar Zalmi by 15 runs
Usman Khawaja scored a hundred as Islamabad posted the highest score ever by a Pakistan team in T20 cricket
What is Reform?
Reform is a right-wing, populist party led by Nigel Farage, a former MEP who won a seat in the House of Commons last year at his eighth attempt and a prominent figure in the campaign for the UK to leave the European Union.
It was founded in 2018 and originally called the Brexit Party.
Many of its members previously belonged to UKIP or the mainstream Conservatives.
After Brexit took place, the party focused on the reformation of British democracy.
Former Tory deputy chairman Lee Anderson became its first MP after defecting in March 2024.
The party gained support from Elon Musk, and had hoped the tech billionaire would make a £100m donation. However, Mr Musk changed his mind and called for Mr Farage to step down as leader in a row involving the US tycoon's support for far-right figurehead Tommy Robinson who is in prison for contempt of court.
Our legal consultants
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
