RIYADH: The Islamic finance industry is forecast to grow in 2023-2024 thanks to Saudi Arabia’s strong banking system, according to a new report from S&P Global Ratings. The US-based agency expects around 10 percent growth across the industry in 2023-2024 after seeing a similar expansion in 2022, with the Kingdom and Kuwait largely fueling last year’s rise. S&P Global Ratings also believe that despite a predicted economic slowdown and a decline in sukuk issuance this year, new supplies of the product will exceed those set to mature. The report echoes findings from US-based Fitch Ratings released in April, which claimed the global sukuk issuance for the second quarter of 2023 is building up even as it faces short-term uncertainties amid continued macro-volatilities. In its report, S&P Global Ratings said: “We expect a material slowdown in GCC (Gulf Cooperation Council) economies" real GDP (gross domestic product) growth in 2023-2024, compared with 2022, largely based on lower oil production. “However, we think that Saudi Arabia’s banking system performance will continue to underpin a large portion of the expanding Islamic finance industry. “In other GCC countries, growth of about 5 percent appears plausible in the absence of new major government investment cycles.” The report argues that Islamic finance is still more of a collection of local industries than a truly globalized sector, and that it is looking at ways to “enhance its competitiveness” in order to secure a broader appeal. However, within the countries looking to utilize the sukuk market, Egypt and Turkiye were identified as most likely to seek funding through this financial instrument. The report said: “Egypt has established a $5 billion sukuk program and issued its first sukuk in early 2023 for a total of $1.5 billion. “We understand that this attracted significant investor interest, with more than $6 billion demand and a 59 percent allocation to investors from the Middle East and North Africa. “The profit rate of the three-year sukuk was set at 10.875 percent, which at the time was broadly in line with the yield on Egypt"s conventional bond with a similar maturity date of 2026.” The report made clear that “overall, we think that the volume of new issuances will continue to exceed maturing sukuk.”