The global economy is on the brink of recession once again, due to the impact a war in Iraq could have on confidence and economic growth, according to Morgan Stanley. Analysts at the brokerage have slashed their forecasts for US, European and global growth and warned that recession is looming. Citing an expected rise in crude oil to USD40 per barrel and increased geopolitical uncertainties, they cut their forecast of world GDP growth in 2003 to 2.5pc from 2.9pc and trimmed their 2004 estimate to 3.8pc from 4.0pc. "The downward revision for 2003 has the effect of transforming what we had previously depicted as an anaemic recovery in the global economy into a world that is right back on the brink of its official recession threshold of 2.5pc," said Stephen Roach, chief economist at Morgan Stanley. He said the new forecasts are based on a scenario in which a US-led coalition invades Iraq in the near future. The brokerage cut its European GDP forecast to just 0.8pc from 1.2pc, which would mark an even weaker performance than last year, and its US forecast to 2.1pc from 2.5pc It also said it expects the ECB to cut rates by 1.0pc by June in response to a war. //www.fxcentre.com