- GENEVA (Reuters) - The
strikes
on the United States last month will accelerate the world economy's journey
into recession and may well deal a lasting blow if they hamper economic
integration, the World Economic Forum said on Thursday.
-
- "In the short term, the terrorist attacks have
probably
worked as a catalyst, pushing the world economy into a recession more
quickly
and severely than would have been the case otherwise,'' the WEF said in
an addendum to its Global Competitiveness Report.
-
- It said the damage to business and consumer confidence,
coupled with the increased cost of travel, trade and communications as
a result of the attacks and the tightened security, would take their toll
on growth.
-
- "Although it is highly probable that these two
factors
will dissipate over the next year, they could well place a drag on global
economic recovery,'' it said.
-
- The Geneva-based organization, which aims to provide
a forum for the discussion of key issues on the global agenda, urged a
"resolute and powerful'' response to the attacks on landmarks in New
York and Washington.
-
- But it said large-scale global conflict would raise the
costs of conducting cross-border business and cap gains in economic
well-being.
-
- "Over the longer term, the terrorist attacks will
have a lasting negative impact if the policy responses trigger a reversal
of the global economic integration that has characterized the past 20
years,''
it said.
-
- While military reprisals were a certainty, the WEF called
for continued diplomacy to avoid such conflict.
-
- "Although less important than the direct loss of
lives, the economic costs would be horrendous,'' it said.
-
- Countries most at risk included those emerging markets
which depend on the United States, such as east-Asian export-oriented
countries.
Nations like Argentina, Brazil and Peru, which have relatively high levels
of sovereign debt, could struggle to raise funds in the months ahead, it
said.
-
- Countries which depend on shipping and air cargo will
see their costs rise, while the drop in international travel will hit
tourism-dependent
nations, it said.
-
- However a "flash survey'' of 90 senior executives
between September 26 and October 1 showed that while 79 percent predicted
a recession next year, more than half of those were pencilling in such
a downturn before the attacks.
-
- "Both corporate investment and consumer demand will
ebb at least slightly in the near future, but perhaps not by as much as
predicted by early fears,'' the WEF said. "It suggests the global
economy is more resilient than many observers would suggest.''
-
- But this economy has become increasingly interconnected
in recent years in terms of production, communication and
transportation.
-
- "In light of the unimaginable horror of the attacks
of September 11, policymakers need to find ways to protect those networks
amidst a climate of uncertainty, and in many instances, fear,'' the WEF
said.
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