/www.bloomberg.com/ By Bill Varner
United Nations, (Bloomberg) -- The U.S. economy will grow 2.5 percent this year, less than the 3 percent previously forecast, United Nations economists said, citing the threat of a war against Iraq.
The European Union's economy will also grow less than forecast at the beginning of this year, expanding 1.6 percent instead of 2 percent, the UN Economic Commission for Europe said.
``The potential shock waves from a possible war in Iraq cast a long shadow on the short-term outlook,'' Brigita Schmoegnerova, executive secretary for commission and former finance minister of the Slovak Republic, said in a statement. The commission's 52 economists and other analysts examine the economies of Europe, the U.S. and Canada.
The U.S. and U.K. are preparing for a war to disarm Iraq, saying Saddam Hussein's regime has violated UN demands for disarmament. More than 225,000 U.S. and U.K. troops are in the Persian Gulf readying for an invasion.
``This has already contributed to the weakening of consumer and business confidence and has fostered a wait-and-see attitude with regard to big spending items,'' the UN report said. ``Even the baseline forecasts, which assume there will be no military conflict, suggest only a moderate strengthening of growth.''
The risks to growth include the cost of a possible war for the U.S. and its impact on oil prices and stock markets, coupled with the lingering bank crisis in Japan and the high level of business and consumer indebtedness, the report said.
The highest growth rates for 2003 in the surveyed area are forecast for East European nations and the Commonwealth of Independent States, because of investment by multinational companies. They will show ``continued resilience'' this year, the UN said, and will be led by Azerbaijan (7.5 percent growth), Tajikistan (7.4), Albania (6), Armenia (6), Belarus (6) and Kazakhstan (6). Russia's economy is forecast to grow 3.5 percent to 4.4 percent this year.
In Western Europe, economic growth will be strongest in Ireland (3.9 percent), Greece (3.6), Turkey (3.6), Cyprus (3.5) and Malta (3.4), according to the UN. The U.K. economy will grow 2.4 percent in 2003, with 1.6 percent expansion in France and 0.8 percent in Germany, the UN said.
Growth is likely to accelerate in 2004, the commission said.