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 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%,” he noted.

“In terms of population, we represent 25% of the world, yet our contribution to the global economy is approximately 9%.”

These figures, Erdoğan said, 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.”

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.

Current system ‘cannot be sustained’

Erdoğan 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.”

Interest-free economy

Erdoğan went on to reiterate his opposition to interest-based systems, which he said are incompatible with justice.

“Throughout my nearly half-century-long political career, in every role I have undertaken with the people’s mandate, I have steadfastly opposed interest-based economic systems. I have always objected to this distorted model that deepens inequalities, disrupts income justice and turns billions into the financial slaves of a handful of capitalists – and I continue to object today,” he said.

Erdoğan said he had consistently stated that under no circumstances can interest and interest-based economic systems be considered legitimate.

“I have highlighted the numerous issues caused by interest in the economy, production, trade and social life. However, the opposition – serving as the voice of rent-seeking elites – has consistently stood against us on this matter, just as they have on almost every issue,” he said.

“Even in policies that were clearly right, they failed to adopt a national and local stance for the benefit of our country and people. They could not move beyond the arguments instilled in them, or rather, they lacked the courage to do so.”

The president said he would continue to voice his aspiration for an interest-free economy.

“I will not be content with mere objections. I will also work to develop alternatives and strive to ensure the widespread adoption of alternative solutions within society.”

Islamic finance law

Also addressing the summit, Treasury and Finance Minister Mehmet 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.”

Share still small

Şimşek described a world economy marked by intensifying trade tensions, high indebtedness and the emergence of AI technologies. He 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.”

“We are mobilizing all our resources to ensure the sector grows healthily,” Şimşek noted, 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 summit, organized by the AlBaraka Forum for Islamic Economy, 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 two-day summit was organized in collaboration with Türkiye’s Investment and Finance Office, the Istanbul Financial Center (IFC), Albaraka Türk, Ibn Haldun University and the Islamic Cooperation Youth Forum (ICYF).

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.