Global agency: Banking operations in Iraq remain weak, and the economy is expected to contract in 2026.
Global agency: Banking operations in Iraq remain weak, and the economy is expected to contract in 2026.
2026-11-07
Shafaq News – Baghdad
The global credit rating agency Standard & Poor’s Global (S&P Global) predicted that banking operations in Iraq would continue to be weak, given the economic contraction during 2026, while anticipating a recovery in banking activity in conjunction with the recovery of the economy and its growth of 20% during 2027.
The agency stated, in a report on the Iraqi banking sector seen by Shafaq News Agency, that banking operations in Iraq remain weak as a result of the economic and structural challenges facing the sector, expecting the possibility of recovery during 2027 in conjunction with the improvement of economic activity.
She noted that the Iraqi economy is facing a contraction during 2026, against the backdrop of a halving of oil production and disruption of exports as a result of the repercussions of the war in the Middle East and the closure of the Strait of Hormuz, given the country’s heavy reliance on oil revenues.
The report identified a number of key risks facing the banking sector, including limited foreign funding, fragile economic conditions amid ongoing regional geopolitical tensions, the dominance of state-owned banks in the banking sector and distortions in market conditions, as well as the failure of financial supervision and regulation to keep pace with international standards.
According to the agency’s forecasts, continued turmoil during 2026 may be followed by a strong economic recovery in 2027, with projected growth of 20%, which could have a positive impact on banking activity and operations in the country.
shafaq.com
