Last year, I prefaced the 2022 Annual Guide on a rather optimistic note, albeit with careful caution. The world was getting used to COVID-19 — it was getting better at adapting to a new normal, thanks to vaccines — and there was a collective frustration over debilitating restrictions which spanned two years. Just as we thought 2022 would offer a respite from the harsh hand COVID-19 has dealt since 2020, Russia invaded Ukraine, and that triggered another crushing domino effect.
Not only has the war caused one of the biggest human displacement crises since World War II, global supply chain and trade, which were already strained due to the pandemic, took further paralyzing hits. Energy and food prices spiraled out of control. Global inflation almost doubled to 8.8% from 4.7% according to IMF figures. Central banks from around the world scrambled to hike rates to tame inflation. A cost-of-living crisis was declared. Investor confidence plummeted.
Unsurprisingly, global economic growth is expected to falter from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023, the IMF projected. This is the worst growth profile since 2001, except for the 2008 global financial crisis and the acute phase of the COVID-19 pandemic.
The Islamic debt capital market (DCM) was a casualty of market uncertainty and high interest rates. Moody’s Investors Service is expecting global Sukuk volume to shrink to US$160–170 billion in 2022, down from US$181 billion in 2021. But while DCM activities were muted, bank financing and syndication thrived, keeping Islamic banks busy.
So, what can we expect in 2023? Is it really all doom and gloom?
Market participants are surprisingly bullish. As you read through the 2023 IFN Annual Guide, you will note how market experts have identified growth hot spots and new opportunities amid such tumultuous times. For the past 19 years, the IFN Annual Guide — the industry’s longest-running annual publication on the global Islamic finance sector — has been the leading report for the industry, by the industry, tracing the most important market developments and discussing the upcoming year’s outlook, as told by market leaders.
As always, IFN is deeply grateful and honored to have the world’s best contribute to this seminal publication.
Vineeta Tan
Managing Editor
IFN