/www.bloomberg.com/ By Michael Smith
Rio de Janeiro, (Bloomberg) -- 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 percent from 3 percent in 2002, Rogerio Zandamela, the IMF's representative in Brazil, said during conference on the world's economy. Without a war, global growth may accelerate to as much as 3.5 percent this year, Zandamela said, citing preliminary statistics. The IMF will release its World Economic Outlook in April.
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 will depend on how long the war lasts, analysts said.
``If it's all over in a month, global confidence will come back quickly,'' said Peter West, an economist at Poalim Asset Management (UK) Ltd. in London, a unit of Bank Hapoalim Ltd., Israel's biggest bank. ``What's important is the duration of the war, and how bad the Middle East is left politically and economically.''
Support for a war receded last week after Hans Blix, the UN's chief weapons inspector, said Iraq has increased its cooperation.
Millions of antiwar demonstrators protested over the weekend, including crowds of more than 500,000 in capitals of Britain, Spain and Italy, countries that have been the strongest supporters for U.S. President George W. Bush.
The Brazilian real fell 2.3 percent in the five days ending Feb. 14 on concerns a war in Iraq would cause petroleum prices to rise and the economy to slow.
``The emerging markets may suffer the most because of risk aversion,'' said Kai Stefani, an economist with Dresdner Bank Lateinamerika AG in Hamburg.
Brazil's currency today rose 1.3 percent to 10.7785 reais to the dollar at 3:01 p.m. New York time as war concerns receded and Brazilian banks completed foreign bond sales.