Malaysia’s Islamic finance sector estimated to top US$800 billion
Malaysia held a 33 per cent share of global sukuk outstanding at the end of Q3 2026, retaining its leading position, Fitch Ratings said.
Malaysia’s Islamic finance industry had an estimated value above US$800 billion at the close of Q3 2026, Fitch Ratings said. That put its size at more than 150 per cent of GDP, with government policies and an established domestic ecosystem supporting the sector.
Fitch ranked Malaysia as the largest market for sukuk worldwide. Within Malaysia, sukuk represented about 64 per cent of the domestic debt capital market. A US$1.5 billion government issuance also marked the country’s return to US dollar sukuk after a five-year absence.
By asset category, sukuk led the Islamic finance industry with a 47 per cent share. Islamic banking contributed 42 per cent, while the shares for Islamic funds and takaful were eight per cent and three per cent respectively, the agency said.
For 2027, Fitch projected government debt at around 74 per cent of GDP, compared with the current median of 57.4 per cent for 'BBB'-rated sovereigns. Its expectation of a gradual decline in debt, including sukuk, rests on nominal GDP growth and planned fiscal consolidation.
The agency expects the industry to keep growing, helped by domestic market depth and policy support in the 2027 Budget. However, it said growth could face constraints from volatility in external markets, reduced issuance of sovereign sukuk, and currency, interest-rate and commodity-price fluctuations.
