The World Bank has downgraded its outlook for global growth for this year because of the war in Iraq and warned that the US could slip back into recession. It cut its forecast for 2003 global GDP growth to 2.3pc from 2.4pc, largely because it expected growth in "high earning" countries to ease to 1.9pc from 2.0pc. Growth in developing countries will hit 4.0pc, it said, matching an earlier forecast. The report said a gradual recovery is expected this year, but warned that there are major risks to growth should the war in Iraq turn out to be a lengthy conflict. It also said failure by the US to stabilise the region following the military conflict would further impact on growth. "Our baseline remains one of a gradual recovery. However, downside risks are substantial if the war were to be protracted or the region does not stabilise," it said. The report also said there is a risk of recession in the US, which as the world's largest economy, will drive any recovery. "With subdued core inflation, sluggish growth and a series of cyclical blows, recession and deflation risks could come to the fore," the document said. //www.fxcentre.com