Market size of global halal industry to reach $7.7 trillion by 2025

30 September 2023 Consultancy.asia 3 min. read
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Southeast Asia’s halal industry is booming according to a new study by management consulting firm YCP Solidiance, and is showing no signs of slowing down.

‘Halal’ is a religious term rooted in Islamic dietary laws, denoting products that are permissible or lawful for Muslims to consume. Its opposite, ‘haram’, signifies forbidden or unlawful items. Therefore, certain animals and their by-products are strictly prohibited in Islam and are considered haram, like, for example pork and most intoxicants, such as alcohol.

Many Muslim-majority regions and countries have established organizations and agencies responsible for certifying and labeling certain products as halal. That includes countries in Southeast Asia, like Malaysia, Singapore, Brunei, and the most populous Muslim country in the world, Indonesia.

Market size of global halal industry to reach $7.7 trillion by 2025

The majority of the world’s Muslim population lives within the member states of the Organization of Islamic Cooperation (OIC), which comprises approximately 1.6 billion individuals. That accounts for 85% of the global Muslim community, boasting a membership of 57 nations spanning four continents.

In the coming years, OIC member countries are anticipated to exhibit a higher rate of economic growth in comparison to the global average, with a projected compound annual growth rate of 7.0% during the period from 2020 to 2026, as opposed to the global average of 6.4%. Many Muslim-majority countries have relatively young populations, abundant natural resources, and high foreign direct investment, among other indicators of strong economic activity.

Though most in the West have food in mind when thinking of halal, the term extends well beyond food into many different areas including finance, lifestyle products, pharmaceuticals, travel, media, cosmetics, and business practices, which are all marked by an adherence to Islamic principles.

The total market size of the halal industry is anticipated to expand to $7.7 trillion by 2025, up from $5.7 trillion in 2021. Notably, Islamic financial services represent the largest share of the total, at around two thirds.

From a country perspective, Malaysia leads in halal food and travel, claiming the top spot in terms of market share, and is second in halal pharmaceuticals, as per the latest edition of the Global Islamic Economy Indicator. Malaysia's advanced halal industry includes a comprehensive certification system, industry parks, logistics, and research institutions.

Malaysia also stands out as a leading hub for Islamic finance, with $620 billion in assets, 18% of the global total and a high FDI, ranking sixth within the OIC countries as per 2021 data.

Market size of global halal industry to reach $7.7 trillion by 2025

In the coming years, consumer spending on halal products is expected to grow at a compounded annual growth rate of 7.5%, meaning that the total will hit $2.8 trillion by 2025, up from $2.4 trillion today.

Technology and sustainability

The YCP Solidiance report further notes that the halal industry is increasingly recognizing the pivotal role of technology in expediting its expansion and bolstering consumer trust. Key technological advancements, including blockchain, internet of things, artificial intelligence, e-commerce platforms, and certification applications, are being actively expanded within the halal sector.

The Covid19 pandemic has meanwhile triggered a heightened focus on sustainability throughout the entire halal supply chain. Food and medical supply shortages have prompted OIC member countries to recognize the importance of self-sufficiency at both the state and organizational levels.

The primary focus lies in implementing halal traceability services to ensure the absolute verification of the halal supply chain. Notably, countries like Malaysia, Indonesia and Brunei have incorporated technology into their national strategies to enhance transparency and efficiency within the halal supply chain.