Malaysia’s Islamic finance industry is expected to grow faster than conventional banking with growth driven by the retail segment in 2022 and 2023, Moody’s Investors Service said.
Analyst Li Tengfu said at this point, the credit rating agency maintained a projection of four to five per cent growth for Malaysia’s banking sector.
“We may see a few percentage points higher for the Islamic banking,’’ he said at Moody’s Investors Service Global Islamic Finance Industry Update media roundtable here.
He said the expansion in gross domestic product (GDP), projected to be slightly below six per cent for 2022 and 2023, and commodities prices such as oil and crude palm oil (CPO) would contribute to demand for financial products and services.
“The oil price is still at fairly elevated level and at the same time, CPO prices are still significantly higher compared to pre-pandemic level of 2019 and 2018. These are essentially what really driving our current expectation,’’ he said.
He said commodity-exporting countries such as Malaysia and Indonesia are also seeing a balancing effect from aggressive United States (US) interest rate hikes.
“One is that you had, a very strong economic growth and of course inflation is rising as well but here in Asia Pacific such as Malaysia and Indonesia, the government has the fiscal capacity somewhat because of the benefit in term of commodity export that they can use to sort of partially offset those pressure.
“That’s why I think in Malaysia and Indonesia, you see that policy rate hikes are probably more moderate compared to what happening in the US as well as in the Gulf Cooperation Council (GCC) countries,’’ he noted.— malaymail
