President Recep Tayyip Erdoğan on Friday highlighted the Muslim world’s underperformance and untapped economic potential, urging for greater intra-Islamic cooperation in trade, finance and investment.
Addressing delegates at the 2nd Global Islamic Economy Summit in Istanbul, Erdoğan emphasized the disparity between the Muslim world’s demographic weight and its economic clout.
“Muslims account for 25% of the world’s population, yet Islamic finance assets total only about $2.5 trillion,” he told the event organized by the AlBaraka Forum for Islamic Economy at the Istanbul Financial Center (IFC).
“The Organisation of Islamic Cooperation (OIC), which is the largest international organization after the United Nations, consists of 57 member countries. However, their share in global trade is only around 11%,” Erdoğan said.
“In terms of population, we represent 25% of the world, yet our contribution to the global economy is approximately 9%.”
These figures, according to Erdoğan, reflect underperformance compared to the potential of the Islamic world. “As the Islamic world, we must maximize our trade, investment, financial cooperation and collaboration opportunities,” he added.
Erdoğan went on to reiterate his opposition to interest-based systems, while saying Ankara was determined to press on with its current economic program until all of its goals are achieved.
Under the program, launched in mid-2023, the Central Bank of the Republic of Türkiye (CBRT) had tightened its benchmark policy to contain inflation, which dipped to below 38% in April, from as high as 75% last May.
‘Longing ‘ for interest-free economy
Erdoğan said work must be done to change and find alternatives to what he called an interest rates-based economic system, and added such a system cannot be viewed as legitimate.
“I have always opposed the distorted system that deepens inequalities, disrupts income justice, and turns billions of people into the slaves of a handful of capitalists. I oppose it again. I have often said that, no matter what, we cannot view as legitimate interest rates and an economic system based on interest rates,” Erdoğan said.
“I will continue to voice my longing for an interest rate-free economy from now on too. We will not turn back from our battle for the economic order based on interest rates to change,” he added.
The president also vowed to continue implementing the economic agenda drafted by his treasury and finance minister, Mehmet Şimşek, in order to chart a path of disinflation.
“We are determined to implement our economic program, with which we have made noteworthy progress over the past two years, until it reaches its goals,” Erdoğan said, and added that the end goal was to achieve single-digit inflation.
Current system ‘cannot be sustained’
The president went on to say it is increasingly evident that there is a growing need for alternative paradigms across all sectors. In economics, particularly in finance, there is a rising demand for a human-centered, fair, compassionate and responsible approach, he noted.
“One undeniable truth has become clear to everyone: the current global economic system, with its flawed structure that prioritizes consumption and profit maximization, continues to sideline human values, exacerbate inequalities and promote growth without productivity,” said Erdoğan.
Instead of developing effective solutions to support economic development, he argued that the existing system conceals fundamental issues with superficial measures.
“Many experts and thinkers who have correctly analyzed the current situation assert that the system, in its current form, cannot be sustained any longer.”
Erdoğan underscored Türkiye’s ambitions to position Istanbul as a global Islamic finance hub, pointing to initiatives under the Istanbul Financial Center framework as evidence of the country’s commitment.
“The collaborations we have initiated under the Istanbul Financial Center serve as a concrete testament to our efforts to integrate into the global economy while preserving our Islamic values,” he said.
The president stressed that Türkiye attaches great importance to the development of participation finance centered in Istanbul.
“Its unique location, accumulated expertise and potential provide substantial advantages to both Istanbul and the Istanbul Financial Center. With the dedicated efforts of our institutions and authorities, I hope we can transform these advantages into lasting achievements,” he added.
Islamic finance law
Also addressing the summit, Şimşek said Türkiye is actively working on a new Islamic finance law, aiming to pass it through Parliament as part of broader efforts to strengthen the country’s participation-based financial system.
Şimşek underlined the increasing importance of Islamic finance in tackling global economic challenges. He noted the sector’s potential to offer a fairer, risk-sharing and asset-backed financial model, especially in today’s uncertain global landscape.
“We are currently finalizing the Islamic finance law and preparing to introduce it to Parliament,” he said. “We are carefully reviewing the draft to avoid including provisions that may cause implementation issues or hinder sectoral acceptance.”
Şimşek emphasized that Islamic finance, with its focus on sustainability, real-economy backing and inclusive access, presents a credible alternative for promoting shared prosperity.
“The Islamic finance model stands out today because it emphasizes equitable participation, financial inclusion and sustainable growth,” he said.
Şimşek pointed out that Islamic finance currently represents just over 1% of global financial assets but has witnessed rapid growth in both market value and presence.
However, he noted that much of this growth remains geographically concentrated, and that challenges such as regulatory gaps, talent shortages and a lack of global innovation investment persist.
“The key players in this field are not investing in this innovation on a global scale. At the same time, there is a lack of talent and significant gaps in the regulatory framework,” said the minister.
“Important progress has been made in recent years, but we are still facing major structural challenges that need to be overcome. Only if we can clearly identify the factors causing us to lag behind will we be able to develop effective solutions,” he added.
Islamic finance in Türkiye
Türkiye currently has nine participation banks, with Islamic finance holding an 8.3% share of the national banking system.
Şimşek said this figure remains far below its true potential.
“Participation finance in Türkiye has reached a significant share within the banking sector. The markets, particularly in terms of participation-based financing instruments, are showing development,” he said.
“However, currently, participation banks account for only 8.3% of the Turkish banking system, which is far below its potential and clearly indicates the need for broader-scale growth.”
He stressed the government is mobilizing all its resources to ensure the healthy growth of the sector, citing Türkiye’s recent ranking in the top 10 of the Global Islamic Finance Development Index among 136 countries.
He also emphasized that the Treasury continues to emphasize sukuk issuances both locally and internationally.
Şimşek went on to emphasize that prosperity should be shared fairly, and said they see Islamic finance as playing a crucial role in this process.
“Although it currently holds a relatively small share in the global financial system, summits and international conferences in this field significantly accelerate its development,” he said.
“The rapid growth of Islamic finance in recent years is remarkable. Previously almost invisible, it now represents approximately 1% of global financial assets. We should see this as a springboard,” he added.
“By recognizing existing issues at both local and global levels, taking the right steps, improving efficiency and fostering strong collaborations, we can increase this share to 2% or even 5% in a much shorter time frame.”
The Global Islamic Economy Summit focuses on empowering Islamic financial and non-financial institutions to help achieve their goals of sustainable growth and leave an impact on the global economy via new strategies.
The event has been organized as part of the “AlBaraka Summits” in collaboration with Türkiye’s Investment and Finance Office, the Istanbul Financial Center (IFC), Ibn Haldun University, the Islamic Cooperation Youth Forum (ICYF), and AlBaraka Group as a global partner.
The summit is focused on increasing operational efficiency, encouraging innovation, strengthening risk management, promoting financial participation and supporting cooperation among industry stakeholders by developing a deeper understanding of Islamic principles.
High-level discussions on the integration of Islamic economic principles are expected at the summit.
“We look to create new roads, not just to walk on new roads. We are creating in Istanbul, Medina, London, Kuala Lumpur, Karachi, Cairo and many others,” Yousef Hassan Khalawi, the secretary-general of the AlBaraka Forum for Islamic Economy, said at the opening ceremony.
As part of the Islamic ecosystem, more and more initiatives should be created, he added.
Human-centered alternative
Addressing the event, Bilal Erdoğan, chair of the board of trustees of Türkiye’s Ilim Yayma Foundation, said Islamic economics is not just an interest-free financial model but a moral, justice-based and human-centered way of life that offers an alternative paradigm for the world.
The widespread information gap surrounding Islamic finance remains a key concern remains, even in Türkiye, where it accounts for around 8% of the financial sector, said Erdoğan.
Many people, he noted, reduce Islamic finance to an interest-free tool, failing to understand its foundational values.
“It is not really only about an interest-free way of reaching finance. It is actually a potential alternative paradigm for humanity,” he said. “It is actually a potential alternative paradigm for humanity.”
He also criticized Islamic financial institutions in Türkiye for being overly cautious in their approach and lacking effective communication strategies.
“How do we frame our products? How do we try to make sure that people realize that there are these ways of doing similar things as well?” Erdoğan said, urging a stronger focus on Islamic finance’s unique features, particularly its principles of partnership and participation.
He added that millions of people around the world remain outside the banking system not due to exclusion, but because the system itself has “lost its humanity.” Islamic finance, he said, should aim to integrate these individuals by “uplifting them with the dignity that it offers.”
Addressing the humanitarian crisis in Palestine, he added: “I am hoping for once this genocide will come to an end.”
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