Islamic Capital Markets To Provide Major Stimulus For Economic Growth

The UAE, Saudi Arabia and Qatar will all increase their global importance as centres of Islamic finance in the coming years as the three markets experience rising international demand for financing.

According to a report by Euromoney, rising international demand for infrastructure and investment project financing is likely to stimulate growth in the three markets, which are already the top three Islamic banking markets in the Gulf.

In particular, there is set to be strong demand from the government sector, which is increasingly working to ensure that at least a proportion of large project financing is structured in compliance with Shariah law.

The report was released ahead of the Euromoney Qatar 2013 Conference.

The balance sheet of Qatar’s Islamic banks, the fastest-growing of the three markets, are expected to be worth more than $100bn by 2017, according to a recent report by global credit rating agency Standard and Poor’s.

Qatar’s fast-growing Islamic banking sector is having an impact on the country’s banking system. The Islamic banks’ market share in domestic credit increased from 13 per cent in 2006, to 25 per cent at the end of 2012, according to the S&P report.

Global interest in the Islamic financing sector was demonstrated in October 2013, when Britain announced that it would become the first non-Muslim country to sell a bond that can be bought by Islamic investors.

Prime Minister David Cameron said that the UK Treasury is drawing up plans to issue a £200m Sukuk.

The new sharia-compliant gilt will enable Britain to become the first non-Muslim country to tap the growing pool of Islamic investments, which is set to exceed $1 trillion by 2014.