March 28, 2003	Friday	Muharram 24, 1424

WASHINGTON, March 27: Fears of a months-long war in Iraq raised the prospect on Thursday that the US economy may barely skirt a recession in early summer.

Latest government data confirmed US gross domestic product (GDP) — total economic output — grew at an annualized rate of 1.4 per cent in the last quarter of 2002, down from

4.0 per cent in the previous quarter.

Now the world’s biggest economy is stuck in the fog of war, however, and fears are emerging that the US and British forces may be fighting for months, rather than weeks.

Paul Ferley, senior economist at BMO Financial Group, said his group was expecting fairly sluggish economic growth of about 2.0 per cent in the first three months of this year.

“There seems to be more discussion that this conflict could take months, rather than weeks. If that does actually play out, it is starting to suggest a clear downside risk to the economy,” Ferley said.

Consumers’ sentiment — critical because their spending accounts for two-thirds of US activity — could remain weak under that scenario, he said.

A private Conference Board survey released on Tuesday showed confidence, already at a near 10-year low, crumbled again in March.

In the fourth quarter, consumer spending climbed 1.7 per cent, only slightly better than first thought, revised government figures showed.—AFP