The head of the World Trade Organisation, Supachai Panitchpakdi, has said the possibility of war in Iraq is affecting global trade activity.

"The rise in logistic costs in doing business around the world has inhibited the kind of normal trading activities that we should be seeing at the normal period in time," Mr Supachai told the BBC.

He cited the examples of increased oil prices causing transportation costs to rise, and extra security measures impacting handling costs at ports.

He also says the increased political uncertainty is holding back foreign investment flows.

Existing troubles

Mr Supachai acknowledges there are many other economic factors contributing to the current weakness of international trade.

World commerce grew very strongly in the last decade but slowed sharply along with the global economy.

International trade actually fell in 2001.

But, Mr Supachai said, the talk of war has added to the problem.

Mixed picture

The growing possibility of a war has already had a conspicuous impact on financial markets in recent weeks.

Share prices have fallen in the major stock exchanges, the dollar has weakened and oil prices have been high.

Mr Supachai is, however, optimistic that if there is a war and it is over quickly, world trade and foreign investment will rebound quickly.

"I don't expect long drawn-out effects from the war," he said.

"But I certainly would predict that because of the lapse in trading activities and investment activities, people would come back, I think we would be seeing more activities in the global perspective right after the war."