This article is an extract from the State of the Global Islamic Economy Report 2017/18.
The report can be downloaded from HERE.
Executive Summary: The State of the Global Islamic Economy Report 2017/18
The Islamic Economy is at the cusp of major growth and widespread recognition, having gained traction as Muslims assert their religiosity and traditional values. Awareness about the concept of Halal is on the rise, and companies are responding to these consumer needs, be it for products or services. The State of the Global Islamic Economy Report 2017/18 brings you the latest developments and trends from this economy while also highlighting the future direction of this sector.
For the second year running, we have listened to the industry and millennial consumers to gauge views, opportunities and challenges. Sentiment across the board, from Halal Food to Islamic Finance and Modest Fashion, to Halal Travel, Halal Pharmaceuticals and Cosmetics, is overwhelmingly positive at 77 percent of interactions. For the first time, we look at the future state of what the Islamic Economy might be like in 2030 if core challenges and opportunities are addressed, which can see the emergence of multi-billion-dollar, scaled global enterprises.
This Report estimates that Global Muslim spend across lifestyle sectors was $2 trillion in 2016, while the Islamic Finance sector has $2.2 trillion in total assets. Food and beverage leads Muslim spend by category, at $1.24 trillion, followed by clothing and apparel at $254 billion, media and entertainment at $198 billion, travel at $169 billion, and spending on pharmaceuticals and cosmetics at $83 billion and $57.4 billion respectively.
Malaysia continues to lead the Global Islamic Economy Indicator, followed by the UAE and Saudi Arabia.
Halal Food is the largest and most diverse sector of the Islamic Economy. New entrants have come into the market, and product offerings have firmly moved beyond being meat-focused to include candy, readymade meals, snacks and children’s food.
Established players are expanding at home and abroad, including through franchising. Multinationals have also made major investments in Muslim-majority markets, anticipating rising demand. Meanwhile, Private Equity investment and sovereign wealth funds have been particularly active, and a number of Halal Investment Funds are in development. The International Halal Accreditation Forum established in the UAE in 2016, with 27 global accreditation bodies as members, is a further positive development for the industry. With Muslim spend on food and beverages growing at nearly double that of global growth, there are significant opportunities for investment and the creation of global Halal Food brands, with spending expected to reach $1.93 trillion by 2022.
The Islamic Finance sector continues to evolve. Both Muslim-majority and Muslim-minority countries are recognizing the segment’s potential, with banks becoming fully-fledged Islamic institutions, and governments encouraging Islamic Finance to improve financial inclusion. The sukuk industry continues to mature, with a number of debut sukuk issuances over the past year and more in the pipeline. Further propelling growth is the adoption of Islamic FinTech, be it the world’s first Sharia-compliant robo-advisory firm, or Sharia-compliant gold platform. Notably, such endeavors have been achieved through utilizing crowdfunding. A burgeoning sector, assets were estimated at over $2 trillion in 2016, and expected to surge to $3.8 trillion by 2022.
Halal Travel is getting its moment in the sun. The number of Muslims traveling is at an all-time high, and there is corresponding demand for Halal Travel, be it Halal hotels and beach resorts, to Halal dining options and Halal airlines. Halal hotel chains are also emerging and family-friendly attractions are being developed in the GCC. Along with a plethora of new online agencies catering to Muslim tourists, the Muslim equivalents of Airbnb have emerged. Muslims spend on travel was $169 billion in 2016, and is forecast to reach $283 billion by 2022.
Modest Fashion is on the catwalks and in high street stores. Designer brands and boutiques have recognized that Modest Fashion is a la mode, developing new lines and Ramadan collections. Start-up Modest Fashion brands have also been making inroads around the world, particularly for Hijabs, gaining traction through the use of social media to spread the word. Modest athletic apparel is a notably trendy segment, with Nike getting in on the act as well as Danish label Hummel. Muslim spend on clothing was $254 billion in 2016, and is forecast to reach $373 billion by 2022.
Halal Media and Recreation is challenging perceptions and adapting to the needs of Muslim millennials. New films are being released, TV channels are going on air, and mainstream media is increasingly embracing Islamic content, be it on Buzzfeed, or Amazon Channels offering films and documentaries about Muslim culture and life through streaming-service Alchemiya. Muslim spend on media and entertainment was $198 billion in 2016, and is forecast to reach $281 billion by 2022.
The Halal Pharmaceuticals and Cosmetics sector is quickly moving out of its niche status, especially Halal cosmetics. Companies continue to open and make their presence felt on retail shelves and online. Multinational companies are also recognizing the segment’s potential, notably U.S.-based Orly teaming up with Muslimgirl.com to create and launch six Halal nail polishes, just in time for Ramadan. Halal Pharmaceuticals are equally gaining traction, especially biologics and nutraceuticals, while Halal-certified vaccines for dengue fever, polio and Meningococcal meningitis (for Hajj) are soon to be launched worldwide. Muslims spend on pharmaceuticals was $83 billion in 2016, and is forecast to reach $132 billion by 2022, while spend on cosmetics was estimated at $57.4 billion, and to reach $82 billion by 2022.
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