Expert: Sharia Instruments More Resilient to Turbulence When Energy Prices Rise

Jakarta (ANTARA) - Sharia economics expert and Deputy Chair of the Indonesian Association of Islamic Economists (IAEI), Munifah Syanwani, assesses that Sharia financial instruments are relatively more resilient to market turbulence than conventional systems when global energy prices surge.

According to her, spikes in oil prices often trigger high volatility in conventional financial markets due to their close links with interest rates, stock markets, and monetary policies.

“When oil prices surge above $100 per barrel, conventional capital markets experience extreme volatility because they are heavily dependent on interest rates and market sentiment,” she stated during a webinar attended in Jakarta on Tuesday.

In contrast, she views Sharia financial indices as demonstrating better resilience because they are based on real sectors and supported by assets.

“Sharia instruments are pegged to real sectors and asset-based, and do not encourage excessive speculation,” said Munifah.

These characteristics, she continued, make Sharia instruments a more stable alternative amid global uncertainties, particularly those triggered by energy price fluctuations.

On the other hand, she noted that rising oil prices also create liquidity surpluses in producer countries, especially in the Middle East region.

According to her, this condition has the potential to drive investment flows back into Sharia financial sectors and the global halal industry.

However, she also acknowledged that global energy price increases can raise production costs, including for the domestic halal industry.

Munifah also emphasised that strengthening the real sector, including the halal industry, is key to maintaining Sharia economic stability amid global uncertainties. Being asset-based and focused on tangible activities, the halal industry is deemed more resistant to financial market fluctuations.