Hopes that Islamic finance would escape the economic downturn are unfounded, early figures suggest. After six years of growth, the value of sukuk bonds issued fell from $42bn (£28bn) in 2007 to $20bn (£13.4bn) in 2008, according to a new survey.

The Islamic Finance 2009 report by International Financial Services London (IFSL) blamed the global economic slowdown, coupled with a ruling from Bahrain’s Accounting and Auditing Organisation for Islamic Financial Institutions questioning the sharia compliance of some sukuk structures.

The global Islamic finance market is a lucrative source of advisory roles for international law firms.

IFSL, a not-for-profit organisation that promotes UK financial services, also reveals that investment in Islamic funds tailed off in 2008. While the number of Islamic funds rose to an estimated 680 in 2008 compared with 150 in 2000, their value fell sharply to around $12.5bn (£8.4bn) in 2008, from $17.2bn (£11.5bn) in 2007.

The global Islamic market was worth an estimated $729bn (£489bn) at the end of 2007, compared with $531bn (£356bn) at the end of 2006 – a year-on-year rise of 37%. Assets held in sharia-compliant banks – which make up the bulk of the global market valuation – were $622bn (£417bn) in 2007. Figures for 2008 are not yet available.