The September 11 terrorist attacks on the United States have had a profound impact on the world economy, with financial markets falling, currency markets volatile and consumption slowing down. Economists say impoverished people around the world are likely to suffer the most.
The World Bank says in a new report that as many as 10-million people could be pushed into poverty next year as developing economies are battered by slowing global growth, partially the result of last month's terrorist attacks on the United States.
Economists say they are already witnessing a slowdown in world trade, a tourism slump, falling commodity prices and reduced foreign investment. They say that the attacks dealt a devastating blow to the already fragile global economy, which had been steadily weakening.
Peter Stephens is an Asia-based spokesman for the World Bank. He says that while the United States and other wealthy countries will undoubtedly be hurt as economic output declines further, poor nations are bound to feel the impact much more sharply, since they have neither the resources nor infrastructure to cushion the blow.
"The impact," he said, "is much more pronounced when you are dealing with life and death issues as you are in developing nations where income levels are very, very low and the money that people make and the things that they need for basic sustenance are threatening by slowdowns in investment and exports and dropping commodity prices."
Economists agree that the aftershocks are widespread and varied, and are bound to affect people in almost every corner of the globe. For instance, 65 percent of the tourists who were planning trips to the Caribbean in the coming months have canceled. In South Asia, exporters are forced to spend 10 to 15 percent more to ship their goods abroad as security and insurance costs rise.
Economist Kozo Kunimune says that a lack of consumer confidence in the United States and other rich nations is a critical problem for their trading partners in Asia and elsewhere. He is forecasting what he calls a trade shock for many countries as orders are reduced and canceled for a huge array of goods and services, from semiconductors to cars to data processing.
He says the drop-off in trade will have an enormous impact on the developing countries in Asia and other parts of the world and the biggest impact is on exports. He adds that exports were already weakening this year, but the terrorist acts will cause further deterioration and affect countless people.
Governments in Asia and Africa say that farmers will be especially hurt. Commodity prices were expected to fall more than seven percent even before the attacks, now the decline is expected to be far more dramatic.
Mr. Stephens of the World Bank says that in this respect, Africa will be the worst-affected, with falling prices of commodities such as cotton condemning a further two million people to live below the spending level of $1 per day.
"As industry needs less to produce and as there is a drop in demand in big export markets," he said, "then commodity prices also will flatten and that hits hard at the poorest and most vulnerable people in the world who rely on the production and sale of commodities to earn enough to live."
The World Bank estimates that the attacks will result in a cut in economic growth in the industrialized world by three-quarters of a percentage point next year to just over one percent. It forecasts that the developing countries will see a contraction in growth of more than half a percentage point to a rate of three-point-seven percent.
While the United States and countries in the European Union nations and elsewhere have cut interest rates and spent billions of dollars to support their aviation sectors, Mr. Stephens suggests they should also consider how to best help impoverished countries invigorate their economies.
"It is clear that much more needs to be done to lift people out of this just above the marginal line of poverty, you cannot have so many hundreds of millions of people immediately affected by events like this simply because there is a slowdown," he said. "There needs to be an effort to boost direct assistance so that they can use it productively and invest."
In an especially chilling prediction, the World Bank says that as many as 40,000 children under five years of age could perish next year from childhood diseases and malnutrition as poverty increases.