Last year, I wrote that one year into the COVID-19 pandemic, we were still navigating the ‘new’ normal, with many pining for pre-pandemic normalcy. Not much has changed since then: the pandemic is still ongoing, with many small wins that vaccination provided now under serious threat of being completely wiped out as new variants emerge. Most are still reeling from the severe economic and emotional damage. And it does not look like we would be out of the woods anytime soon. But, two years on, I daresay that more have accepted that the pandemic is our reality and this is reflected in the measures policymakers are taking to recover from it.
Make no mistake, it has still been a very trying year. But we have become more familiar with this reality and have become better adapted to the circumstances within revised expectations. After plunging into negative GDP growth territories in 2020, the global economy rebounded strongly last year growing 5.5% according to the World Bank. Momentum picking up is also a theme within the Islamic finance world: total Sukuk issued in 2021 were up 36.1% year-on-year to US$252.3 billion while global outstanding Sukuk reached US$711.3 billion, up 12.7%, according to Fitch Ratings.
Islamic banks are posting stronger growth, Islamic indices are performing at par, if not better, than their conventional counterparts amid an explosion of new Shariah funds while Islamic fintech players are making greater inroads. Conversations with industry leaders relayed a sense of relief and higher spirits for 2021, although this sense of optimism takes a more cautious tone for 2022.
This seemingly never-ending stream of Greek alphabets to denote the various reiterations of the COVID-19 virus reminds us that our situation is precarious. Economists are circumspect: the World Bank expects global growth to decelerate to 4.1% in 2022; and we may just see this rippling across the financial world, including Islamic finance.
But we are, arguably, better equipped today than we were 12 and 24 months ago at the start of this global health crisis which, although it overshadowed a number of tectonic geopolitical shifts, did not repel any of the reverberations.
We at IFN are very proud and grateful to have experts from across the world sharing their observations of the past year and projections for the upcoming one in this seminal IFN Annual Guide, a publication in its 18th year. These pages take you on a trip around the world and across a plethora of sectors, giving you a nuanced picture of growth, and setbacks, of the Islamic finance sector.