Is­lamic con­sumer spend­ing to in­crease to $3.2tn by 2024

The National - News - - BUSINESS - NADA EL SAWY

World­wide spend­ing in Is­lam-in­spired eth­i­cal con­sump­tion sec­tors is set to in­crease 45 per cent by 2024, reach­ing $3.2 tril­lion from the end of last year, ac­cord­ing to a new re­port.

Malaysia, the UAE, Bahrain and Saudi Ara­bia con­tin­ued to lead the Global Is­lamic Econ­omy In­di­ca­tor rank­ings out of 73 coun­tries, ac­cord­ing to the sev­enth an­nual State of the Global Is­lamic Econ­omy sur­vey done by Di­narS­tan­dard, a re­search and ad­vi­sory com­pany in the US. In­done­sia made the big­gest jump from 10th to fifth place.

The in­di­ca­tor score is a com­pos­ite of 49 met­rics, such as sup­ply and de­mand and gov­er­nance, weighted across sec­tors rel­a­tive to size.

It cov­ers seven sec­tors, in­clud­ing Is­lamic fi­nance and six con­sumer sec­tors: halal food, mod­est fash­ion, phar­ma­ceu­ti­cals, cos­met­ics me­dia and re­cre­ation , and Mus­lim-friendly travel.

Is­lamic fi­nance is the largest sec­tor at $2.5tn, fol­lowed by halal food, which to­talled $1.4tn last year.

While Malaysia topped in the Is­lamic fi­nance and Mus­lim-friendly travel cat­e­gories, the UAE led in the five other sec­tors, in­clud­ing halal food and mod­est fash­ion.

“The UAE’s con­sis­tent rank among the top three in the Global Is­lamic Econ­omy In­di­ca­tor year after year is a key out­come of the Dubai: Cap­i­tal of Is­lamic Econ­omy ini­tia­tive and its pos­i­tive im­pact on the na­tion’s econ­omy,” said Sul­tan Al Man­souri, Min­is­ter of Econ­omy and chair­man of the Dubai Is­lamic Econ­omy De­vel­op­ment Cen­tre.

Sheikh Ham­dan bin Mo­hammed, crown prince of Dubai, es­tab­lished the DIEDC in 2013 to de­velop and pro­mote the emi­rate as the global cap­i­tal of the Is­lamic econ­omy.

Spend­ing in the six con­sumer sec­tors in Is­lamic economies grew 5.2 per cent in 2018 year-on-year and is ex­pected to grow at a com­pound an­nual growth rate of 6.2 per cent over the next five years.

Is­lamic fi­nance as­sets are ex­pected to grow at a 5.5 per cent CAGR to hit $3.4tn dur­ing the same pe­riod.

In­vest­ments in Is­lamic econ­omy com­pa­nies have recorded tremen­dous growth of around 400 per cent to $1.2bn in the 12 months to July 31, with 63 deals in 18 coun­tries.

More than half was in­vested in halal prod­ucts, 42 per cent in Is­lamic fi­nance and 4 per cent in the other Is­lamic lifestyle cat­e­gories.

How­ever, Is­lamic econ­omy deals re­main a small frac­tion of the $596bn in­vested glob­ally in con­sumer and fi­nan­cial services sec­tors, high­light­ing the fu­ture growth op­por­tu­nity.

The global Is­lamic econ­omy has gained in­creas­ing im­por­tance due to grow­ing de­mand for prod­ucts and services that are Sharia-com­pli­ant. It also presents a growth op­por­tu­nity for the 57 mem­ber states of the Or­gan­i­sa­tion of Is­lamic Co-op­er­a­tion (OIC).

The re­port es­ti­mates that OIC economies can ex­pe­ri­ence a boost of 1 to 3 per cent in gross do­mes­tic prod­uct through trad­ing of halal prod­ucts.

The study in­cluded all OIC coun­tries, as well as non-OIC coun­tries with a strong pres­ence in the halal in­dus­try, such as Brazil, Aus­tralia, the UK, Ger­many, France, the US, Canada, China and Rus­sia.

“The re­port has helped make a busi­ness case for fund­ing start-ups and driv­ing mul­ti­ple na­tional-level halal econ­omy strate­gies and in­vest­ments as well as cor­po­rate ex­pan­sion ini­tia­tives,” said Rafi-ud­din Shikoh, chief ex­ec­u­tive and manag­ing direc­tor of Di­narS­tan­dard.

The core driv­ers of the Is­lamic econ­omy among con­sumers, ac­cord­ing to the re­port, in­clude a grow­ing Mus­lim pop­u­la­tion, ris­ing af­flu­ence, in­creas­ing re­li­gious affin­ity, dig­i­tal con­nec­tiv­ity and eth­i­cal con­sumerism.

The global Mus­lim pop­u­la­tion is ex­pected to grow to 2.2 bil­lion by 2030 from 1.7 bil­lion in 2014, ac­cord­ing to the Pew Re­search Cen­tre’s Fo­rum on Re­li­gion and Pub­lic Life.

For busi­nesses, gov­ern­ments and in­vestors, the driv­ers in­clude multi­na­tional growth, eco­nomic di­ver­si­fi­ca­tion and de­vel­op­ment, a boost in in­ter-OIC trade and in­vestor re­turns.

Saudi Ara­bia and Turkey are the only OIC coun­tries in the top 25 economies around the world.

“OIC gov­ern­ments are seek­ing to boost GDP growth and di­ver­sify their economies, in­crease for­eign di­rect in­vest­ment and de­velop global con­sumer pack­aged goods cham­pi­ons, with Malaysia, the UAE and In­done­sia set­ting the tone for de­vel­op­ing na­tional Is­lamic econ­omy strate­gies,” the re­port said.

AP

Malaysia spent the most in Is­lamic fi­nance and Mus­lim­friendly travel sec­tors

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