Skip to content Skip to Search
Skip navigation

Muslims defy pandemic to spend $2trn globally in 2021

Muslim spend on food increased by 6.9 percent in 2021
Muslim spend on food increased by 6.9 percent in 2021
  • Global Islamic Economy Report reveals strength in Gulf
  • Saudi Arabia and UAE rank 2nd and 3rd overall
  • UAE’s Muslims make most investments

Bucking the global trend of tightening the purse strings, the world’s 1.9 billion Muslims spent the equivalent of $2 trillion at the height of the Covid pandemic.

This spending reflects an 8.9 percent year-on-year growth from 2020 across a range of sectors offering halal food, pharmaceuticals, cosmetics, fashion, travel, and media/recreation.

According to the 2022 State of the Global Islamic Economy Report, which covers developments from the middle of the pandemic in 2020 until the third quarter of 2021, there are several key drivers fuelling the increased spend.

These include a large and growing Muslim population, a greater urge to adhere to Islamic ethical values relating to consumption, and a growing number of national strategies dedicated to halal product and service development.

This is notably the case in the Gulf countries which all sit within the top 15 of the 81 countries ranked in this year’s Global Islamic Economy Indicator.

The top four positions remain unchanged from last year with Malaysia retaining the top spot followed by Saudi Arabia, the UAE and Indonesia.

Of the remaining GCC countries, Bahrain ranked sixth, Kuwait was eighth, Oman 11th and Qatar in 12th position. 

New entrants to the top 15 include the UK and Kazakhstan.

“The Islamic economy has moved up the agenda in several countries and is considered a core part of economic recovery policies from the pandemic,” the report says.

“Saudi Arabia, the UAE, Malaysia, and Nigeria have all put their weight behind bolstering the Islamic economy, especially in halal food, Islamic finance and fintech.

“In the Islamic finance sector, Pakistan, Qatar and Kuwait announced plans for new centralised regulations to enhance the governance aspect.”

Investments in Islamic economic sectors across the Organisation of Islamic Cooperation (OIC) and select non-OIC markets grew by 118 percent to $25.7 billion in 2020-21 from $11.8 billion in 2019-20.

The number of relevant M&A, private equity, and venture capital transactions increased from 156 in 2019-20 to 210 in 2020-21.

The top five countries in terms of the number of investments has changed for the first time in two years with the Gulf countries strengthening their footholds.

The UAE now ranks first – securing 16 percent of all deals recorded – and Saudi Arabia has entered the top five after ranking seventh last year.

Halal food and Islamic finance dominated the spending, comprising 15.5 percent and 66.4 percent of the total deal value respectively, albeit a decrease from the 93 percent of investments these sectors generated in 2019-20.

Despite ongoing uncertainty related to the fallout from the pandemic, global Muslim expenditure in 2022 is forecast to grow by 9.1 percent.

The report notes that all sectors, except travel, had returned to pre-pandemic spend levels by the end of 2021.

Muslim expenditure is forecast to reach $2.8 trillion by 2025 at a four-year compound annual growth rate (CAGR) of 7.5 percent.

The Muslim demographic is cited as one of the strongest demand drivers of the global Islamic economy; Muslims are growing twice as fast as the non-Muslim population, and this trend is expected to remain the same over the next decade with Muslims growing to two billion in number by 2030 and three billion by 2060, covering around 30 percent of the global population.

Global Islamic economy in numbers

Finance
The Islamic finance sector strongly rebounded in the first half of 2021 after a tough year during the height of the pandemic. Assets are estimated to have grown to $3.6 trillion in 2021, up 7.8 percent, from $3.4 trillion in 2020.

In the first half of 2021 global sukuk issuances reached a record high of $100 billion.

Profitability has returned to the Islamic banking sector and there have been big mergers, notably in Indonesia.

Islamic fintech is a rapidly growing segment with 241 companies currently in the market. This sector is forecast to grow from around $49 billion in assets in 2020 to $128 billion by 2025 based on estimated transaction volumes.

Of the GCC countries, the UAE market is showing rapid growth in this space and is currently home to 31 Islamic finance fintechs.

The report highlights how Saudi Arabia’s strength in the Islamic finance sector continues to grow in terms of its Islamic finance assets, the value of Islamic funds, as well as growth in its Islamic finance education, with the number of available courses and seminars on Islamic finance increasing from 30 to 57.

Islamic finanial assets in the GCC are expected to grow by eight percent in 2022 and reach $4.9 trillion in 2025 at a four-year CAGR of 7.9 percent.

Halal food
The importance of food security has been greatly underlined due to the pandemic with countries doubling down on food security policies, including the development of, and trade in, halal food. Muslim spend on food increased by 6.9 percent in 2021, from $1.19 trillion to $1.27 trillion.

The OIC is squarely behind such developments with the Islamic Organisation for Food Security (IOFS) implementing 16 food security programs including establishing the Islamic Food Processing Association, a Grain Fund, and a Food Security Reserve.

There have been significant mergers and acquisitions among halal food players while digitalisation has expanded across the value chain from farm to fork, for example investments in smart farms in the UAE where Abu Dhabi’s Pure Harvest Smart Farms raised $60 million in a new round of funding in March 2021.  

Food tech has garnered particular attention towards improving the production, traceability of agri-produce and logistics.

The halal food sector is expected to grow by seven percent in 2022 and reach $1.67 trillion in 2025 at a four-year CAGR of 7.1 percent.

Travel and tourism
Muslim spend on tourism increased from $58 billion in 2020 to $102 billion in 2021.

Government intervention has kept many tourism businesses afloat as international travel has remained muted, but investment nonetheless continued with the expectation of a rebound in the years ahead.

Dubai notably made a bold decision to continue with the Expo 2020 Dubai, hosted in 2021, while Saudi Arabia continued investing in tourism as it diversifies its economy as part of the Vision 2030 strategy.

Muslim expenditure on tourism is expected to grow by 50 percent in 2022 to $154 billion and reach $189 billion in 2025 at a four-year CAGR of 16.5 percent.

Pharmaceuticals
Muslim spend on pharmaceuticals increased by 6.5 percent from $93.5 billion in 2020 to $100 billion in 2021.  

The pandemic has loomed large over the halal pharmaceutical sector, with the world’s attention focused on the roll-out of coronavirus vaccinations.

While a halal-certified vaccine is not in sight, the pandemic has driven innovation in the halal segment with a halal-certified Covid-19 detection kit developed in the UK, and a halal-certified face mask in Singapore as preventative care has continued to be a key driver of sales of halal-certified nutraceuticals.

The UAE became the first OIC Arab country to locally produce coronavirus vaccines in a joint collaboration between China’s Sinopharm and Abu Dhabi’s G42.

Digital healthcare is attracting considerable attention in many OIC countries to bolster national healthcare strategies and enhance patient access to healthcare.

The pressure to improve self-sufficiency in pharmaceuticals by OIC developing countries will encourage the development of locally produced active pharmaceutical ingredients (APIs) and medicines, including halal-certified ones. Muslim expenditure on pharmaceuticals is expected to grow by 6.7 percent in 2022 to $106 billion and reach $129 billion in 2025 at a four-year CAGR of 6.7 percent.

Halal cosmetics
Muslim spend on cosmetics increased by 6.8 percent in 2021, from $65 billion to $70 billion. It is expected to grow by a further 7.2 percent in 2022 to reach $75 billion and at a four-year CAGR of 7.4 percent to reach $93 billion in 2025.  

Halal cosmetics sales are growing in the GCC markets with brands like Shade M Beauty reaching more customers through tie-ups with ecommerce platforms and retail outlets.

Growing consumer demand for inclusivity and diversity in cosmetics is proving to be a boon for halal cosmetics players.

Media/recreation
Muslim spend on media increased by 7.2 percent in 2021, from $216 billion to $231 billion and is expected to grow by a further 7.5 percent in 2022 to reach $249 billion and $308 billion in 2025 at a four-year CAGR of 7.5 percent.

Gulf-based media companies have spread their wings, particularly into North American markets.

New apps have been launched while non-fungible tokens (NFTs) are taking off as a vehicle to buy digital art via cryptocurrencies, with the UAE having its first NFT digital Islamic art agency.

Islamic-themed children’s content has been particularly popular with Malaysian show Omar & Hana reaching over 3 billion views on its YouTube channels.

The mobile gaming industry has been a particular growth area with the Middle East emerging as the fastest growing mobile gaming market globally.

Latest articles

Oman UAE deals Sultan of Oman president of UAE

Oman and UAE sign deals worth $35bn

The UAE and Oman have announced a host of new commercial and business deals worth a total of AED129 billion ($35 billion). The partnerships were agreed during Monday’s state visit to the Emirates by the ruler of Oman, Sultan Haitham bin Tariq al Said.  Investment and collaboration agreements covered areas including renewable energy, green metals, […]

A silver trader in his shop in Ahmedabad, India. India is sourcing an increasing amount of its silver from the UAE

India’s silver imports from UAE on the rise

Supplies of silver to India from the UAE have increased this year, as the Emirates’ exporters benefit from an agreement signed between the countries two years ago. The India-UAE comprehensive economic partnership agreement signed in 2022 has significantly boosted imports, according to a report by Indian English-language business newspaper The Financial Express.  The UAE route […]

A worker at Al Faw Grand Port. The Development Road project aims to connect the port with Turkey

Gulf to collaborate on $17bn Suez Canal road and rail rival

The $17 billion “Development Road” project is moving ahead after the UAE, Iraq, Qatar and Turkey signed a quadrilateral cooperation agreement.  The road and rail collaboration aims to tie the Al-Faw Grand Port in Iraq’s oil-rich south to Turkey, thereby shortening travel time between Asia and Europe in a bid to rival the Suez Canal. […]

A flooded residential area in Dubai. New drainage infrastructure should be nature-based, say experts

Concrete or sponge? Dubai’s post-flooding options

In the wake of last week’s floods, retrofitting Dubai with traditional, concrete-based drainage systems would be expensive, time-consuming and complicated. As an alternative, authorities should look to nature-based solutions, industry professionals told AGBI. “Dubai should not repeat the mistakes that have been made in most of the Western world,” said Ronny Berndtsson, professor in water […]