Islamic Finance Sector Reaches Nearly $3.9 Trillion in 2024: Key Takeaways

The global Islamic finance sector continues its upward trajectory, crossing a major new threshold. During the 23rd Islamic Financial Stability Forum, held on Thursday, July 4, 2024, in Rabat under the auspices of the Islamic Financial Services Board (IFSB) and Bank Al-Maghrib, experts offered a mixed assessment of a rapidly expanding sector that still faces significant structural challenges.

According to Ghiyath Shabsigh, Secretary-General of the IFSB, the sector reached a total size of $3.88 trillion in 2024, marking an annual growth rate of 14.9%. This expansion has been particularly notable in emerging markets, especially across Africa and Central Asia.

Growing Confidence in the Islamic Finance Model

Shabsigh noted that the sector’s robust growth reflects the rising appeal of Islamic finance as a response to real economic needs. Grounded in ethical principles and risk-sharing mechanisms, Islamic finance is increasingly attracting countries beyond its traditional markets.

However, he cautioned against excessive optimism: “The sector’s rapid growth should not obscure its internal vulnerabilities,” he warned. Among the key challenges highlighted:

• Regional disparities in the sector’s development;

• Uneven regulatory frameworks across countries;

• Lack of suitable market infrastructure;

• Limited investment product offerings;

• Weak integration with international financial safety nets.

A Challenging Geopolitical Climate

Abdellatif Jouahri, Governor of Bank Al-Maghrib, emphasized the negative impact of geopolitical tensions, particularly in the Middle East. He pointed to the Israel-Iran war, the Russia-Ukraine conflict, and ongoing global trade tensions as destabilizing factors affecting Islamic finance performance.

Jouahri reminded attendees that the Middle East holds a significant share of the world’s Islamic financial assets, making the sector especially sensitive to developments in the region. “Every shift—whether positive or negative—has a direct impact on the global market,” he stated.

Increasing Integration into the Global Financial System

Despite these uncertainties, both officials stressed that Islamic finance is now firmly embedded within the global financial architecture. Islamic institutions are increasingly integrated into global capital flows and are active participants in discussions on monetary stability, regulation, and economic resilience.

The Rabat forum thus served as a key platform to reaffirm the need to strengthen governance, harmonize regulations, and encourage financial innovation, in order to consolidate the sector’s progress and prepare for its next phase of growth.

With nearly $3.9 trillion in assets in 2024, Islamic finance is affirming its growing influence in the global economy.

But to sustain this momentum, experts are calling for a collective response to structural vulnerabilities and geopolitical pressures.

The Rabat forum underscored a critical message: growth alone is not enough. It must be accompanied by a comprehensive strategy of stabilization, integration, and innovation to ensure a sustainable future for this alternative financial model.