Higher oil prices will lead to fewer sukuk issuance in 2022, mainly due to lower financing needs in the GCC states, according to Moody’s Investors Service (Moody’s) in a report last month.
However, the ratings agency expected Islamic finance to grow even more in 2022 as economic recovery continues in the GCC region. According to Moody’s vice-president and senior analyst Ashraf Madani, “The economic recovery in Islamic finance markets will boost credit growth and demand for shariah-compliant products, and we expect Islamic banks’ asset growth to continue to outperform their conventional peers.”
With higher oil prices, a stronger economic recovery and lower sovereign funding needs in GCC and Indonesia, sukuk issuance dropped by 12% to $181bn in 2021. Sukuk issuance activity is expected to further decline to $160-$170bn in 2022, Moody’s has forecast.
Takaful premiums are likely to keep growing moderately in the next two to three years, helped by rising demand for medical insurance as more GCC, African and Southeast Asian countries introduce compulsory health cover, Moody’s said. M