Islamic finance's growth to slow in 2016, says S&P
This is due to lower oil prices and changes in the global regulatory framework for banks.The fast-growing Islamic finance industry is set to slow down next year, according to a new report from Standard and Poor's (S&P).
"We think Islamic finance growth will drop to single digits in 2016 from between 10 percent and 15 percent over the past decade," the ratings agency said in a report, adding that such rapid growth had seen the Islamic finance industry exceed an estimated $2 trillion in value.
"But we now think the industry faces challenges from the decline in oil prices, changes in the global regulatory framework for banks and insurance companies, and its own fragmented nature," said S&P Global Head of Islamic Finance Mohamed Damak.
Governments see Islamic finance as a tool to maintain their investment spending, countering the negative impact of oil prices on their budgets, the report said.
Despite this slowdown, S&P expects the size of Islamic finance to hit $3 trillion sometime in the next decade.