The Role of Islamic Economics and Finance in the Era of Digital Transformation, Sustainable Growth and Geopolitical Uncertainty

Over the past years, despite challenges brought by digital transformation, the sustainability agenda, geopolitical uncertainty, and adverse shocks such as the global financial crisis and COVID-19 pandemic experienced by the global economy, Islamic economy and finance have witnessed rapid growth. Islamic economy and finance have flourished not only in Muslim-majority countries but also in advanced countries where Muslims are the minority. According to the State of the Global Islamic Economy Report 2024/2025 by the DinarStandard, the halal economy is projected to reach US$3.36 trillion by 2028 from US$2.43 trillion recorded in 2023. This is more than 90% over five years or over 18% annually. The increase is broad-based, covering all key halal economic sectors, namely, Halal Food, Islamic Finance, Modest Fashion, Muslim-Friendly Travel, Halal Pharmaceuticals, Halal Cosmetics, and Media & Recreation. Respectively, by 2028, they are expected to grow to US$1.94 trillion, US$7.3 trillion, US$433 billion, US$384 billion, US$149 billion, US$118 billion, and US$337 billion. I strongly believe that this remarkable progress that we have observed and expect to observe in the Islamic economy stems principally from the teachings of Islam, from the first word “ْأَرْٱق†, which literally means “read†or “recite†. As I studied Islam in my early years, I often asked myself and contemplated deeply: why “ْأَرْٱق†? I read books and articles on Islamic economics and finance, one of which is Prof. Mannan’s seminal book titled Islamic Economics: Theory and Practice. Through “Iqra’†, I came to realize that reading is the key source for progress and guidance. “Iqra†is the gateway to deep understanding and wisdom. Reading or “ْأَرْٱق†drives our advances and progress in Islamic economy and finance. It is “ْأَرْٱق†that informs us how to unravel, answer, and address issues that we face so that we can move the Islamic economy forward and contribute to the well-being of society and ummah. The Islamic economic system is founded on its values and a framework for addressing contemporary issues related to digital transformation, sustainable growth, and geopolitical uncertainty. The Islamic economic system will surely guide us in resolving future problems. The remainder of this note will dwell on and deliberate on these in more detail