The Middle East continues to be a powerhouse in the Islamic finance industry, commanding a significant share of global Sharia-compliant assets. The region is estimated to hold approximately 77.4% of total Sharia-compliant assets, with Iran and Saudi Arabia being the largest markets, each holding over $400 billion in assets.
Rising popularity of sukuks
One of the most notable trends in the Middle East is the increasing issuance of sukuks (Islamic bonds), which are becoming a preferred financing tool for both governments and corporations.
In recent years the diversity of sukuk issuers has also increased, with debut sukuk instruments being issued by sovereign wealth funds, aircraft lessors in addition to government-related entities. Saudi Arabia, in particular, has been and will continue to be a major player in the sukuk market. The country's 2025 Annual Borrowing Plan outlines a projected funding requirement of SAR 139 billion, which includes the issuance schedule for the Saudi Riyal Sukuk Issuance Program.
Sustainable Islamic finance
The region is also witnessing significant growth in sustainable Islamic finance, with green sukuk gaining traction as part of the global push towards sustainability.
The role of technology
We have also witnessed technological innovation play a pivotal role in transforming the Islamic finance landscape in the Middle East. The integration of fintech solutions, such as digital banking and blockchain technology, is enhancing market efficiency and transparency. Islamic fintech startups, including crowdfunding platforms and peer-to-peer lending, are emerging rapidly, contributing to the sector's growth.
A robust market set for growth
The Middle East's Islamic finance market is poised for robust growth, driven by technological advancements, sustainable finance initiatives, and the increasing issuance of sukuk. The region's ability to leverage these trends and navigate challenges will be crucial in cementing its role as a global leader in Islamic finance.
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