The global Islamic finance industry is on course to reach US$9.7 trillion by 2029, expanding at an estimated average annual growth rate of 10%, according to the 2025 Islamic Finance Development Indicator (IFDI) released by the London Stock Exchange Group (LSEG) in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank (IsDB) Group.
Malaysia, Saudi Arabia, and UAE Lead Global Rankings
Covering data from 140 countries, the report identifies Malaysia as the world’s most advanced Islamic finance market, followed closely by Saudi Arabia and the United Arab Emirates (UAE). Other high-performing nations include Indonesia, Pakistan, Kuwait, Bahrain, Iran, Qatar, Türkiye, and Bangladesh, showcasing the geographical diversity and strength of Islamic finance ecosystems globally.
READ MORE: Renowned Saudi Scholar Dr. Abdullah Omar Naseef Passes Away at 86
The study also reveals that governance remains the best-performing pillar worldwide, underscoring significant progress in regulatory reforms, transparency, and disclosure standards across the industry.
Industry Outlook and Key Drivers
Mustafa Adil, Head of Islamic Finance at LSEG, emphasized that the next phase of growth will be defined by cross-border partnerships, innovative regulations, and national policy strategies.
“At the current growth trajectory, global Islamic finance assets are projected to hit US$9.7 trillion by 2029. This demonstrates the sector’s critical role in driving sustainable growth and advancing financial inclusion globally,” Adil noted.
Similarly, Khalid Khalafalla, Acting CEO of ICD, highlighted the importance of the IFDI as a benchmark for shaping policies and supporting a resilient Islamic finance landscape.
“The IFDI mirrors the persistent commitment of governments and institutions to build inclusive and sustainable Islamic finance systems aligned with global development goals,” he said. “These objectives perfectly align with ICD’s mission to strengthen private sector development across its member states.”
Resilience Amid Economic Challenges
Despite global economic uncertainties, the report indicates that the Islamic finance industry continues to show remarkable resilience. The global sukuk (Islamic bond) market surpassed US$1 trillion in outstanding value as of 2024, with total issuances climbing 11% year-on-year to US$254.3 billion.
Notably, sustainability-linked sukuk have seen rapid growth. The ESG-compliant sukuk segment exceeded US$50 billion in outstanding value, with US$15.4 billion in new issuances recorded in 2024, reflecting the deepening integration of environmental, social, and governance (ESG) principles into Islamic financial instruments.
Dominance of Islamic Banking
Islamic banking continues to dominate the industry, representing 72% of global Islamic finance assets and operating in 84 markets worldwide. The sector’s footprint is expanding notably in Sub-Saharan Africa, where 104 Islamic banks and windows now operate across 28 countries.
The three largest markets—Iran, Saudi Arabia, and Malaysia—collectively account for US$4.3 trillion, or approximately 72% of total global Islamic finance assets, reaffirming their leadership positions in the global landscape.
Comprehensive Industry Benchmark
The Islamic Finance Development Indicator (IFDI) serves as a composite index evaluating progress across five dimensions:
-
Financial Performance
-
Governance
-
Sustainability
-
Awareness
-
Knowledge
By combining these metrics, the index provides a holistic picture of how Islamic finance contributes to inclusive growth and economic stability while aligning with Sharia-compliant principles. It remains a key reference point for policymakers, regulators, and investors seeking to understand and strengthen the industry’s future trajectory.
