Rating agency Standard & Poor’s on Monday pointed to an opportunity in the current pandemic environment for accelerating and unlocking the long-term potential of Islamic finance.

“COVID-19 offers an opportunity for more integrated and transformative growth with a higher degree of standardization, stronger focus on the industry’s social role, and meaningful adoption of financial technology,” it said in a written statement.

According to S&P, stakeholders in the sector are realizing the importance of standardization as government coffers are depleted and access to sukuk remains time consuming and more complicated than conventional instruments.

A sukuk is an Islamic financial certificate, similar to a bond in Western finance, which complies with Islamic religious law known as Sharia.

“Lockdown measures have also shown the importance of leveraging technology and creating a nimbler industry,” it noted.

With the right coordination between different Islamic finance stakeholders, S&P said it expects the industry could create new avenues of sustainable growth that serve the markets.

S&P also projected the Islamic finance industry to show to low- to mid-single-digit growth in 2020-2021 after 11.4% in 2019 following strong sukuk market performance.

“The market was, in fact, poised for good performance in 2020 but the pandemic and lower oil prices changed the outlook,” it said.

Amid tougher conditions, S&P said, it does not see core Islamic finance countries using sukuk as a primary source of funding despite their higher financing needs.

“However, we think that Turkey might try to tap the market aggressively in 2020 to use all of its available funding options,” it said.

The global rating agency predicted that the volume of issuance will reach $100 billion in 2020 compared with $162 billion in 2019.

On Sunday, Turkish President Recep Tayyip Erdogan said that Islamic financial tools offer a “key” to get out of the economic woes the world is now facing.

Earlier this year, credit rating agency Moody’s announced that Turkey’s Islamic banking assets are set to double within a decade, as government initiatives drive growth in the sector.

Turkey has positioned itself to be a hub for participation banking and Islamic finance.

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