Attacks to cost world economy £230bn – UN

The morning of terror in New York and Washington on 11 September is likely to cost the global economy $350bn (£230bn) – or a full percentage point of growth – in 2001, the United Nations forecast last night.

In the first detailed attempt to quantify the economic damage of the attacks, the UN's Department of Economic and Social affairs said growth of the $35 trillion world economy would now be only 1.4 per cent this year, compared with the 2.4 per cent expansion forecast earlier.

The UN reckons all regions, with the exception of China, will lose 1 per cent or more of growth. US GDP will be only 1 per cent higher, compared with a previous forecast of 1.8 per cent. EU growth will drop from 2.7 per cent to 1.8 per cent, while Japan's economy is likely to shrink by 0.5 per cent, instead of growing by 0.7 per cent. The former 'tiger' economies of the south and east will see their growth plunge from an expected 4 per cent to just 1.7 per cent.

According to the UN, only China, with unchanged growth of 7.5 per cent, will escape damage. World growth in 2002 is likely to be 2 per cent, instead of the 3 per cent expected earlier. UN economist, Ian Kinniburgh, said the decline would hurt poorer countries hardest. He blamed the drop on the disruption of financial markets, a fall in confidence, and the cost of security measures.