He added a global economic recovery was likely by the last quarter of this year.

"It will be very difficult for Asia to disconnect from the consequences of the war and SARs," he said, referring to the Severe Acute Respiratory Syndrome (SARS) virus which has killed more than 80 people and infected nearly 2,500 around the world.

Camdessus was speaking to reporters before addressing an economic forum hosted by the Manila-based Asian Institute of Management.

He warned that no one could say how long the US-led war on the Iraq would last or what its ultimate effects would be.

"My impression is that the consequences will be serious, that it (the global economy) will not go in the right direction," Camdessus said.

"I would not pronounce the word recession," he added.

Camdessus said that there was a slowdown, particularly in the United States and he added the situation in Asia "is bad indeed", referring to the SARS problem and the fallout from the war.

The United States could no longer bail out the rest of the world as its own fiscal situation had deteriorated, Camdessus said. He rejected the notion among a few commentators that increased military spending during the Iraq war would bolster the American economy.

He said an economic upturn could occur later this year.

"We have good people with good reasons who say that if this war is short, if there is no unfortunate conditions in the military or political field, then one could reasonably expect the second part of the year would be a little bit better, the last quarter would be positive," he said.

SPACE.WIRE