Baku: The Islamic Development Bank Institute (IsDBI) and London Stock Exchange Group (LSEG) launched a new joint report titled "Surmounting the Middle-Income Trap: Drivers, Pathways, and the Role of Islamic Finance". The report was unveiled today during the 20th IsDB Global Forum on Islamic Finance, held in conjunction with the IsDB Group Annual Meetings in Baku, Azerbaijan.

According to Saudi Press Agency, this report is the second publication under the Development Traps Series. It examines the middle-income trap as a significant long-term development challenge facing many IsDB member countries and presents policy-oriented analysis on how Islamic finance can support more inclusive, productive, and resilient development pathways.

Many IsDB member countries are classified as middle-income countries, encountering challenges such as slow productivity growth, limited structural changes, financing difficulties, widespread informal economic activity, inequality, debt risks, technological gaps, and insufficient institutional capacity. These factors hinder their progress from middle-income to high-income status.

Acting Director of IsDBI Dr. Sami Al-Suwailem commented on the launch, noting that the middle-income trap presents a substantial challenge to development in many IsDB member countries. The report provides an analysis of the structural barriers affecting productivity, diversified and inclusive growth, and explores how Islamic finance can promote development through risk sharing, asset-backed financing, and social finance.

The report suggests that overcoming the middle-income trap requires coordinated reforms, strengthened institutional frameworks, sustained investment in human capital, increased productivity, encouragement of innovation, economic diversification, and the development of financing models that support real economic growth.