War in Iraq Could Cut Economic Growth

A war in Iraq may cut the pace of global economic growth in half from last year by reducing investment and consumer spending, an International Monetary Fund official said.

Growth may fall to as little as 1.5% from 3% in 2002, Rogerio Zandamela, the IMF’s representative in Brazil, said during a conference on the world’s economy. Without a war, global growth may accelerate to as much as 3.5% this year, Zandamela said, citing preliminary statistics.

The estimate, which comes as the U.S. tries to line up support for a war to disarm Iraq, shows that the effects of a conflict may spread beyond the Middle East, hurting Latin America and other developing regions most, Zandamela said. The extent of the economic fallout would depend on how long a war lasts, analysts said.