COVID-19 Economic Implications, Islamic Finance and the Way Forward

AAOIFI

Islamic Finance Virtual Forum

in collaboration with IRTI, CBFS and Minhaj University

“COVID-19 Economic Implications, Islamic Finance and the Way Forward”

Wednesday, May 13th, 2020

The world around us has changed in less than 90 days. Little was known as we welcomed the year 2020 that the virus (COVID-19) will become a pandemic and bring the world to a standstill as it is today. Suddenly, the untold stories have become relevant once again as we relate the intensity of COVID-19 to those in the past pandemics and plagues. Notwithstanding, the loss of human beings in the earlier pandemics was very significant compared to COVID-19. However, as we transgress through this great lockdown, the world as it is now, has never been in the past and the crisis we are in is unprecedented compared to the great depressions and great recessions. We now live in a world where increased globalization and intense integration, while offering multiple leverages has, on the flip side, stimulated the butterfly effects and the occurrence of black swan events.

Almost all sectors linked with the global and national economies have been impacted, travel and tourism, real estate, manufacturing, supply chains, trade, labor supply, logistics and oil and gas have come to a standstill. This has resulted in the revision of GDP growths, forecasted contraction of global economy (-2.8%), increase in unemployment and overall loss to the humanity in general.

Islamic economics, banking and finance is no exception. As a result, Islamic banks and financial institutions have introduced precautionary measures, multilateral institutions like the Islamic Development Bank has launched US$2.3 billion aid package for its member countries and Muslim communities in non-member countries. The need for financial inclusion, societal and countries wise risk sharing, technology solutions and social financing with amplified focus on philanthropy modes, have become even more important in these extraordinary times.

With this background in perspective, AAOIFI together with CBFS and other key institutions would like to bring forth important discussions among the stakeholders to highlight the challenges posed by COVID-19 and deliberate on potential solutions through Islamic finance, social finance and technology (Fintech).