[PEN-L:30228] Recesssion if Iraq attacked?

["ken hanly" <khanly@xxxxxxxxxxxxxxx>]

HONG KONG, Sept 12, 2002 (Xinhua via COMTEX) -- The Economist Intelligence
Unit (EIU), which operates under the Economist magazine, predicted that the
world would suffer a massive recession if Iraq were attacked and Middle East
oil producers protested by pushing up the oil price.
Robin Bew, the chief economist of the EIU, told Xinhua in a written
commentary Thursday, "Our forecasts assume that the United States does
attack Iraq, and that the Middle East oil producers oppose the US action and
team up to cut oil production, and thereby, pushing the oil price to, say,
70 US dollars a barrel or more, that would deliver a massive supply-side
shock to the global economy and probably trigger a massive recession,
similar to the oil shocks in the 1970s," Bew said.

Turning to the US economy, Christopher Nailer, the Singapore- based regional
economist of the EIU, also told Xinhua in the commentary that the current
imbalance in the US economy is severe, saying that sluggish growth is
forecast for both 2002 and 2003.

"We expect the US economy to grow only 2.4 percent in 2002 and accelerate to
only 2.8 percent in 2003. This is better than 2001 when the US economy grew
only 0.3 percent, but still very weak.

"However, the imbalance in the US economy is severe, and we rate the
possibility of a major recession - worse than the 2001 one - within the next
two years as a 30 percent probability," Nailer said.




Copyright 2002 XINHUA NEWS AGENCY.