2024/25 SGIE Report Highlights the Rapid Rise of Islamic Finance Worldwide

The 2024–2025 State of the Global Islamic Economy (SGIE) Report by DinarStandard has unveiled the remarkable growth of Islamic finance, showcasing its increasing influence on the global financial landscape. Released on July 8, 2025, in Jakarta, the report highlights a 5.5% growth in the global Islamic economy, driven by rising demand for Sharia-compliant products and services. With Islamic finance assets surging to $5.5 trillion in 2024 and projected to reach $7.5 trillion by 2028, the sector is becoming a cornerstone of ethical and sustainable finance. This article explores the key findings of the SGIE Report, its implications for global markets, and the factors fueling this rapid expansion.

Islamic Finance: A Growing Global Force

Islamic finance, rooted in Sharia principles that emphasize ethical, interest-free, and risk-sharing financial practices, has transitioned from a niche market to a significant player in global finance. The SGIE Report notes that Islamic banking accounts for over 70% of total Islamic finance assets, valued at $4 trillion in 2024 and expected to grow to $5.2 trillion by 2028. The sukuk (Islamic bonds) market, another critical component, is projected to expand from $971 billion to nearly $1.5 trillion over the same period.

This growth is driven by several factors, including increasing demand for Sharia-compliant products, supportive regulatory frameworks in Muslim-majority countries, and growing interest in ethical finance among non-Muslim consumers. The report highlights seven key sectors of the Islamic economy: halal food, Islamic finance, Muslim-friendly tourism, modest fashion, halal cosmetics, pharmaceuticals, and media and recreation. Among these, Islamic finance stands out for its rapid expansion and global appeal.

Regional Leadership and Market Dynamics

The Middle East and Africa (MEA) region continues to dominate the Islamic finance market, capturing over 53.4% of global revenue in 2024, approximately $1.1 trillion. Countries like Saudi Arabia, the United Arab Emirates (UAE), and Malaysia lead due to their well-established Islamic banking institutions and supportive regulations. Indonesia, maintaining its third-place ranking in the SGIE Indicator for the second consecutive year, has emerged as a key player, climbing from 10th and 11th positions in earlier reports (2014–2015) to a consistent top-tier ranking since 2023.

Despite a global decline in sukuk issuance by 15% in the first half of 2025, driven by lower local currency issuances in countries like Malaysia and Qatar, the Gulf Cooperation Council (GCC) countries have bucked the trend with strong foreign currency sukuk growth. The UAE, in particular, has leveraged short-term treasury sukuks to raise funds efficiently, reinforcing its position as a global hub for Islamic finance.

Ethical Consumerism and Global Appeal

A notable focus of the 2024 SGIE Report is the rise of “ethical consumerism” among Muslim consumers, particularly since 2024. This trend, partly attributed to geopolitical events like Israel’s attacks on Gaza, has increased scrutiny of international corporations and boosted demand for ethical and halal products. For instance, V7, a soft drink brand launched in 2024, reported a threefold increase in exports to Middle Eastern countries, reflecting consumer preferences for brands aligned with ethical values.

This shift is not limited to Muslim-majority regions. In the UK, awareness of Islamic finance has grown among Muslim consumers, though misconceptions persist, with 30% of people believing it is exclusive to Muslims. Initiatives like Ayan Capital’s $3.6 million funding in December 2024 to expand halal car finance highlight the growing adoption of Sharia-compliant products in Western markets.

Challenges and Opportunities

While the Islamic finance sector is thriving, it faces challenges. The SGIE Report notes that global sukuk issuance dropped to $101.3 billion in the first half of 2025 from $119 billion in mid-2024, primarily due to reduced local currency issuances in key markets. Additionally, some institutions, like Global Islami Bank in Bangladesh, reported significant losses in 2024 (Tk1,308 crore), driven by mismanagement and classified loans. These setbacks underscore the need for stronger governance and risk management.

However, opportunities abound. The International Islamic Trade Finance Corporation (ITFC) reported record trade support in 2024, ranking top as Mandated Lead Arranger in global Islamic syndications. Programs like the Indonesian Coffee Export Development Program and capacity-building workshops in Nigeria and Azerbaijan demonstrate how Islamic finance is fostering sustainable development. The Islamic Development Bank (IsDB) also emphasized the potential of sukuk as a risk-sharing tool for long-term infrastructure investments, appealing to institutional investors seeking resilient and transparent markets.

Technological Innovation and Future Growth

The SGIE Report underscores the role of technology in driving Islamic finance forward. Blockchain technology is being explored for sukuk innovation, while fintech solutions are expanding access to Sharia-compliant products. The rise of Sharia-compliant pension funds, with some in the UK delivering 30% returns in 2024, highlights the sector’s ability to integrate modern financial tools with Islamic principles.

The report projects the Islamic finance market to reach $12.5 trillion by 2033, with a compound annual growth rate (CAGR) of 18.4%. This ambitious forecast is supported by the growing Muslim population, increasing financial inclusion, and the global shift toward sustainable finance. Countries like Brazil and Germany are also seeing rapid growth in Islamic finance, with market sizes of $53.8 million and $149.34 million in 2024, respectively, driven by rising awareness and favorable regulations.

Global Recognition and Policy Support

Islamic finance is increasingly recognized as a pillar of the global financial system. At a July 2025 event in Seville, IsDB President Dr. Muhammad Al Jasser highlighted its role in addressing debt burdens in developing countries through risk-sharing models. The UAE’s Ministry of Finance reported success with its dirham-denominated Islamic T-Sukuk program in 2024, reinforcing its commitment to innovative financing solutions.

Singapore is also emerging as a gateway for Sharia-compliant capital flows, leveraging its strategic position in Asia. The SGIE Report praises countries like Qatar, where non-oil sectors now contribute 64% to GDP, partly due to Islamic finance’s role in economic diversification post the 2022 FIFA World Cup.

The 2024–2025 SGIE Report paints a promising picture of Islamic finance’s rapid rise, driven by ethical consumerism, technological innovation, and strong regional leadership. While challenges like governance issues and market volatility persist, the sector’s alignment with sustainable and inclusive finance positions it for continued growth. As Islamic finance expands beyond traditional markets, its global relevance is undeniable, offering a model for ethical and resilient financial systems worldwide.

Sources: DinarStandard SGIE Report 2024–2025, Standard Chartered, Islamic Development Bank, Global Finance Magazine, Reuters.