Protracted war set to inflict further damage on faltering economy

WAR in Iraq has already started denting the global economy, data and reports showed yesterday, stoking fears of even greater damage ahead as the chances of a protracted war seemed to be rising.

The International Monetary Fund warned a long war could undermine the global recovery and disappoint markets which had generally bet on a fast outcome. Even a short war might have longer-lasting economic fallout, it said.

European Central Bank Governing Council member Ernst Welteke said a long war would more likely lead to protracted global economic weakness than to a quick recovery.