Dubai: Global consumer spend by Muslims are on the rise with the total spending in 2017 is estimated at $2.1 trillion (Dh7.71 trillion) across the food, beverage and lifestyle sectors in 2017, according to the State of the Global Islamic Economy Report 2018-19.

The report has forecast spending to reach $3 trillion by 2023. By category, in 2017 food and beverage leads Muslim spend at $1.3 trillion, followed by fashion at $270 billion, media and recreation at $209 billion, travel at $177 billion, pharmaceuticals at $87 billion and cosmetics at $61 billion.

The report commissioned by Dubai Islamic Economy Development Centre (DIEDC) and produced by Thomson Reuters showed that the Islamic finance sector is fast becoming a force to reckon with, especially in member states of the Organisation of Islamic Cooperation (OIC).

“Every annual report offers fresh facts and statistics that provide us with new insights and perspectives to better understand and more accurately anticipate consumer behaviour among Muslims across key markets. Increasingly, we are convinced that there is more growth potential in all key sectors by including non-Muslims and acceptance levels are on the rise in many markets,” said Abdulla Mohammad Al Awar, CEO of DIEDC.

Islamic banking penetration is on the rise, most notably in the UAE, while Islamic finance overtook conventional loans in Malaysia in 2017 as the main driver of growth of the domestic banking system. The sector has moved beyond the core hubs of the UAE and Malaysia to include new entrants from East Africa to Central Asia, as governments seek to bolster financial inclusion.

Data showed Sukuk issue continues to thrive — one of the key milestones for 2017 was the first dollar-denominated sukuk worth $1 billion by an issuer from the GCC region. The value of assets in the burgeoning sector was estimated at $2.4 trillion in 2017, and is expected to surge to US$3.8 trillion by 2023.

Halal lifestyles

Halal food sector is expanding faster than all other sectors of the Islamic economy. Regulatory oversight of halal food production is steadily improving, with the UAE and Malaysia taking the lead. With Muslim spend on food and beverages forecast to reach $1.9 trillion by 2023, there are significant opportunities for investment and the establishment of global halal food brands.

Halal travel is expanding through the offering of cultural, historical, religious and beach holidays. Muslim-friendly beach resorts are proving particularly popular, while governments in the Middle East as well as the Far East are enhancing services and facilities as the number of Muslims travelling abroad increases. Muslims spent $177 billion on travel in 2017, and the number is projected to reach $274 billion by 2023.

Modest fashion has increasingly gone mainstream, from models in hijabs walking down the catwalks for luxury brands to European fashion magazines sporting Muslim models on their covers. A notable shift has seen high street retailers launch their own modest fashion lines, from Macy’s in the US to Marks & Spencer in the UK and H&M worldwide. Muslim spend on clothing hit US$270 billion in 2017 and is forecast to reach US$361 billion by 2023.

Halal media and recreation is also broadening its appeal, from the big screen to a Muslim ‘Netflix’ for children. The Middle East is experiencing growing demand for Arabic content, with Netflix developing a local series. Muslims spent $209 billion on media and entertainment in 2017, and this number is estimated to hit $288 billion by 2023.

Basics and then some

As is the case with halal food, the halal pharmaceuticals and cosmetics sector continues to expand along with the rise in halal certification of products and ingredients. Muslim consumer spend on pharmaceuticals reached $87 billion and is predicted to hit $131 billion by 2023, while halal cosmetics expenditure was estimated at $61 billion and projected to reach $90 billion by 2023.

The Islamic economy has proven its ability to keep pace with the latest developments in technology and investment. Companies are adopting blockchain for payments to ensure halal compliance, and track food, cosmetics and pharmaceutical products from the manufacturing facility to the retailer.

“There is significant scope for growth in the Islamic economy, with only $745 million in disclosed private equity investments in the last three years, far below the approximately $595 billion in global private equity and venture capital investments undertaken in 2017,” said Salman Jaffery, chief business development officer, Dubai International Financial Centre.