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UN: Terror Attacks Will Have Worldwide Economic Impact

A United Nations survey shows that the September 11 terrorist attacks on the United States will have negative effects on the world economy.

The study, conducted by the U.N. Department of Economic and Social Affairs, says the terror attacks caused economic shocks that will "reverberate through the world economy and global financial markets in the coming months."

U.N. economist Ian Kinniburgh who supervised the research, told reporters the attacks came at an unfortunate time because the world economy was already slowing before September 11. The situation prompted his department to revise growth figures this year for both developed and developing nations. Growth for developed countries, which had been estimated at 2 percent before the attacks is now just 1 percent. The forecast for developing nations has been revised from four percent growth to 2.5 percent.

Mr. Kinniburgh said the most intense economic impact, of course, will be in the United States but that a "ripple effect" will spread through the world. He said there will be a decline in both international trade and investment that those declines will especially hurt developing nations.

"Developing countries have become increasingly dependent on trade and in particular we know that the Asian countries are very trade driven, at least the east Asian countries," he said. "So they will be severely affected and the Latin American countries will also be affected by the trade slowdown and the deterioration in financial markets. In Africa, the consequences will be less direct in the sense they will come mostly through falling commodity prices and a fall in trade volume."

Mr. Kinniburgh added that developing nations that depend heavily on tourism are also expected to suffer.

However the U.N. official was not completely negative. He noted that the generally low global inflation rate will allow many governments to provide both monetary and fiscal help in the form of lower interest rates and increased government spending.