Islamic finance is experiencing significant expansion across Southeast Asia, contributing $859 billion, or 17%, to the $4.9 trillion global market in 2023, according to a recent study. The research, conducted by the Islamic Corporation for the Development of the Private Sector (ICD) and the London Stock Exchange Group (LSEG), highlights the region's dynamic growth despite its relatively small sector size in most countries. With an 11% growth rate in 2022, Southeast Asia's Islamic finance is not only recovering robustly after the pandemic but also outpacing the global average.
The study underscores how the Islamic finance sector in Southeast Asia has rebounded strongly following the tumultuous period during the COVID-19 pandemic. The region had previously accounted for $730 billion, or 20%, of the $3.49 trillion global market in 2020. This significant growth trajectory is now drawing the attention of institutions and experts who see vast potential for further expansion. New players and products are entering the market, signaling a burgeoning interest in tapping into this sector.
Institutions are keen to explore opportunities within this expanding market. The ICD and LSEG study provides key data and insights into the current state of Islamic finance in the region, illustrating a vibrant and evolving landscape. As the sector continues to grow, it offers numerous prospects for financial innovation and development.
Despite its current growth, Islamic finance remains a relatively small part of Southeast Asia's overall financial markets. However, the increasing engagement and investments are paving the way for further advancements. This growing focus on Islamic finance is expected to bring new financial products and services tailored to meet regional demands.