Economists are becoming more pessimistic about prospects for US growth as the Iraq crisis marches on, a new survey indicates.

The Wall Street Journal’s poll of 55 economists found forecasts for the first half of 2003 lower in February than those in December’s study.

Average expectations of GDP growth for the first quarter slipped from 2.7% year-on-year two months ago to 2.6%, while those for Q2 fell from 3.2% to 3%. Twenty-three of the economists cut their forecasts for the first quarter; 26 for the second.

The reasons for the heightened pessimism include the rising cost of oil, fears that businesses are postponing investment while the threat of war lingers, and the effects of terrorism concerns on consumer spending.

Nevertheless, the predicted growth for the first two quarters is still much better than the 0.7% expansion posted in Q4 2002.

What is more, the economists are now more optimistic about prospects for the end of this year, with fourth-quarter growth forecasts rising from 3.7% in December to 3.9%. Almost two-thirds of the polled pundits think the economy will be given a considerable boost if a war on Iraq is won quickly.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff