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Sunday, 7 October, 2001, 12:56 GMT 13:56 UK
Will the world economy survive the crisis?
Poor projections of US economic growth are looking even gloomier as a result of the new crisis.
The aviation and tourist industries were the first casualties. Now volatile financial markets, rising unemployment and shaken consumer confidence are quickly spreading to rest of the world.
Some are hoping that this is a short-term global economic slow down; others fear a free-fall recession from which few countries can escape.
So does an ailing US economy have to bring down the rest of the world with it? Will the political instability resulting from the attacks bring about long-term economic damage?
And what can be done to boost the world's flagging economies?
This debate is now closed. Read a selection of your comments below.
John B, UK
The high-tech economy in the USA has been in trouble for over 2 years. Most world consumers have little or no need for most hi-tech items and the banks face massive exposure to bad loans given to this sector. This is the greed that backfired. Now taxpayers have to pay the price for economic bailouts.
If we can resolve this without starting a religious war we will survive.
This means either one, focusing on Bin Laden and his group alone and not all Islamic terrorist groups or two going after international terrorists regardless of religion.
It is impossible to see the future. That said, a huge credit contraction is possible and could prove very painful and disruptive especially in Japan
Now is a good time to speak with our elders - those of whom have been through world wars, depression and recession as well as a lot more besides.
During the 1970's I was made redundant 5 times in 2 years. I think we are about to experience something worse and harder hitting this time.
I think if people just got on with their lives and jobs, rather than listen to the scaremongering that so called 'analysts' keep bleating to keep themselves in, frankly pointless, jobs then things would carry on fine.
It is possible to be convinced a recession is coming and be scared into not spending or doing anything. Personally if I have money spare and I want something I will buy it. Also I would rather die on a hijacked plane than let these terrorists win by scaring me away from living my life as I wish.
I am currently spending as little as possible and paying off all my debts. I am looking forward to house prices falling, so that normal people can afford houses again. All I can see in the short term is recession and eventually people who have spent money they haven't got will run into trouble. I know of people that have took on high mortgages and have recently lost their jobs, they are already missing payments. The knock on effect from these industries will undoubtedly affect the rest in the UK.
Two-thirds of our economy is dependent on "Consumer Spending".
The highest jobless figures in 4 years, slumbering stock market and this impending war has dampened the moods of all spenders.
I see politicians soliciting consumers to go out and
shop to boost economy. But who is in the mood to spend. How can we be so short-sighted that
we do not see the writing on the wall.
Things will lighten up but meanwhile
we have to be cautious so that we have a soft landing.
Lets not be in denial.
The numbers do not lie. Economist predict a recession so lets be mentally prepared.
The U.S. economy has been the barometer of the world economy and it is rightly said: "If U.S. sneezes the world gets cold." Here what we are looking at is the fear of reviving economically from the psychological point of view. Though the U.S. economy was into recession before the September 11 attacks, the assault on that day has hit the American people more psychologically than financially. And to come out of this trauma, it is up to the American people to try and understand that this fear would lead to further deteriorating of the economy. As commercial airlines have slashed nearly 100,000 jobs worldwide, the answer to it is not just cost-cutting but coming out of alienation and getting back to business. So time has come to roll up the sleeves and get-going or otherwise the world is heading for the worst recession it has seen since the 'great depression' of 1929.
On the one hand this event need not affect the economy significantly but on the other hand the perception of this event may. I'm sure that's why the media coverage has gone to very low profile. Compare the coverage of this event with the Gulf war or Princess Diana's death.
What is huge and will change the way we do business and educate our children is the profound realisation that we (that is the whole of the human race) have our survival and well-being in our own hands.
North America is already in a recession. US and Canadian consumers are cautious of spending on big ticket items. Air Canada is laying off 9,000 people. This is psychologically affecting people's propensity to consume. The world will inevitably end up in a recession since the largest economies of the world are now tied up in the fight against terrorism. After the strikes, we hope there will be spending, lower interest rates and taxes to restart the economies. My company is a distributor of high tech gears, it has laid off some workers since the year began. Everybody in the high-tech economy is affected.
Looming predictions of a cooling of the economy are inevitable, even though the United States government is blaming the terrorist attack for the recent massive layoff. I just got laid off and, instead of getting back to work I am planning to go back to school and learn some new skills. This plan will definitely reduce my spending and I have to support myself with a part-time job.
Terrorist attacks, layoffs and economic fear do not stop consumer spending. It has an effect on luxury spending. The economy will soon get a boost once this chaos is over.
We must all accept the fact that life will never be the same again. There will always be a threat of evil activities, but there will also be a stronger coordinated force to counter it for as long as it takes. With that in mind, we must get back to normal as soon as possible. We are all aware of people taking advantage of the current mood with propaganda that won't help restore economic confidence, but the public needs to see some resolutions being brought about. The longer it hangs, the more unstable it gets. Closer trade between countries, therefore, is a necessity.
If the US government were to yield to the left-wing agenda
as demonstrated by the anti-war protests in Washington and New York, such as reversing its foreign policies, ending support of Israel, providing aid to nations that support terrorism, and banning any military reprisals, the results would most likely be dramatically increased terrorist attacks on the US and its allies. In addition OPEC would raise oil prices beyond any acceptable levels and plunge the US and Europe into an economic depression the likes of which have never been seen.
Haydon Perryman, UK
Over the past few years the economy has been kept moving by the consumer spending faster and faster and faster. This spending has been fuelled by money they did not have and thus could not go on forever.
Now that it looks that reality may be catching up with the over-extended consumer please lets not have any more talk about the ability of more fevered spending getting us out of the hole that we are in, and lets not pile ALL the blame for our economic woes on the shoulders of the terrorists - we created our own economic woes.
In the face of such atrocities, I am sure that the amount of money I am spending is the last of my worries.
Alexander Saradetch, Harrogate, UK
Quite the opposite. With all the media reports of biological warfare and likely terrorist activity in the UK I am spending all my money and borrowing as much as I can. After all, you can't take it with you!
The media has a lot to answer for. In order to increase sales and viewing figures, doom and gloom is exaggerated, talking the country into recession. In the last year a day hasn't gone by without a gloomy recession-oriented survey or news headline. The only way out for the average person is to go shopping and enjoy yourself but avoid using credit.
Rachel Baldwin, UK
Personal crises affect people's spending patterns more than global crises. Someone once said that "a slump is when your neighbour loses his job, a recession is when you lose your job".
Right now, interest rates are at their lowest for decades, people are sitting on a lot of wealth from rising property value, and the pound buys more Euros than it did 18 months ago. Where's the problem?
There is no doubt that the terrorist attacks have had at least a temporary adverse impact on consumer confidence. However, it does seem to me that politicians, such as Bush and Blair seem intent on further undermining consumer confidence by their talk of war. I believe that our politicians may yet succeed in creating the recession that the terrorists would have otherwise failed to create by their abominable actions.
Due to the recent attacks in the US I totally cut down on my spending. Unfortunately I am one of the thousands of airline employees being made redundant, and have now stopped spending altogether.
Absolutely not. Eat, drink and be merry because it may all end tomorrow!
No this incident hasn't affected the way I spend one bit, why would it? What are you people afraid of? Are you worried a Boeing 737 is going to come crashing through the window the next time you're buying a DVD player in Curry's? I couldn't care less about the economy anyway right now. I think there are infinitely more important things to be concerned about at this time than how my ISA is performing.
27 Sep 01 | South Asia
Indian tourism takes a hit
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