Islamic economy can lead out of crisis, says Turkish president

Recep Tayyip Erdogan says over-financing has created bloated economic model

ISTANBUL: Islamic tools offer a “key” to get out of the economic woes the world is now facing, Turkey’s president said on Sunday.

“Over-financing has created a bloated economic model, which acts only over concern about unearned income, without considering social and human costs,” Recep Tayyip Erdogan told the 12th International Conference on Islamic Economics and Finance via video link.

Though addressing long-term developments, his remarks took place against the backdrop of economic fallout from the coronavirus pandemic

“To finance long-term large infrastructure investments, the use of products such as sukuk should be expanded,” Erdogan added, referring to Islamic bonds.

“Contrary to what has been promised, the distribution of income and wealth is gradually deteriorating all over the world, and the gap between the countries widened,” he also said.

“Every crisis that started in the financial sector quickly spreads to the real sector and creates an army of the new unemployed,” he warned.

Earlier this year, credit rating agency Moody’s announced that Turkey’s Islamic banking assets are set to double within a decade, as government initiatives drive growth in the sector.

Turkey has positioned itself to be a hub for participation banking and Islamic finance.