Tourism collapsed, oil prices shot up, trade in oil and non-oil products with Iraq halted and foreign direct investment dwindled, said the Bank's chief economist for the region, Mustapha Nabli.

"When you look at the region, one of the features is the uncertainty and the volatility. Clearly what is happening now is another manifestation of this volatility," Nabli said.

Instability was unlikely to be resolved rapidly, possibly slowing down reforms needed to help the Middle East lock its economy more closely with the rest of the world, he told a news conference.

"That is really what is worrisome," Nabli said, speaking in the run-up to weekend meetings of the 184-nation World Bank and International Monetary Fund here.

Middle East countries affected by the war fell into three broad categories, he said: those hurt by the conflict, those that benefit from higher oil prices, and those that will encounter as-yet unknown repercussions.

Jordan, Egypt, Morocco and Tunisia were the worst casualties.

"Jordan is the most impacted because it is closest to the theater of the activities of war," Nabli said. It had significant trade with Iraq, the tourism industry was hurt, subsidised oil imports from Iraq had halted, and foreign direct investment took a hit.

Prior to war, Jordan's economy had been expected to grow by five percent to six percent in 2003, he said.

"Jordan might lose most of that growth," Nabli said. "Growth might become flat or slightly positive or even negative under some scenarios."

The war wounded Egypt's economy mostly by eroding tourism and by cutting its receipts from Suez Canal traffic, he said. The impact amounted to about 1.5 to 2.0 percent of gross domestic product, plus a negative hit on its external trade and financial balance of 1.5 billion dollars.

The fallout on Morocco and Tunisia would be felt mostly through lower tourism and non-oil trade.

A second group of countries receiving World Bank aid -- Iran, Algeria and Yemen -- would benefit from the war.

"We expect the overall impact of the recent events to be globally positive for these countries because the oil prices are higher than what they would have been without the conflict," the World Bank economist said.

In the third group of countries, Lebanon and Syria would suffer from a decline in trade with Iraq, and uncertainty in the region, but they also would benefit somewhat from higher oil prices, he said.

Jean-Louis Sarbib, World Bank vice president for the Middle East and North Africa region, said the immediate economic impact of wars was rarely positive, disrupting insitutions, networks and infrastructure.

"In the case of Iraq, I think there is an enormous amount of uncertainty as to what institutions, what form of governance, is going to emerge from the post war situation," Sarbib said.

It was impossible to predict whether the Iraq war might exacerbate uncertainty or lead to greater stability, he said.

"The situation is too unclear for us to say which way the chips are going to fall."

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