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The Economic Impact of Terrorism

The year 2016 has witnessed tragedy after tragedy brought about by terrorism. More than 300 lives were lost after a suicide bomber detonated in a busy district in Baghdad. A truck plowing through festival participants in Nice claimed 84 lives. A deadly shooting at a gay club in Orlando left 49 people dead. Bomb attacks in Brussels airport concluded in 35 lives lost. Terrorism has been prevalent in causing the most fatal events in the world.

For those in the scene, the effects are immediate. Panic and fear set in and most of the people involved, especially the victims, are engulfed in paranoia. For the people who are indirectly affected, the people who just hear it in the news, or read it in a social media post, or watch it in the television, they are empathetic. However, for the people in the financial markets, the effects are not as felt.

In terms of economic impact, terrorism has little influence. Here are the reasons why.

1. Short-Term Impacts

The act of terrorism, while a horrible tragedy, are mostly isolated these days. Unlike in the times of world war, attacks only affect the immediate surroundings. Security are tight and the nations are relatively at peace. History has always shown that terrorism has no lasting global economic impact.

2. Individual Sectors

Of course, it will damage the city in the country or the company involved but in the long run, the economy will correct itself. This means that individual sectors are the ones who take the direct hit. Tourism may go down and sales may be significantly lower but the bigger picture will always be that the industry will always go on.

3. Resilient Economies

Another reason why terrorism will not totally prevail is because economies nowadays are resilient. They cause no long-term effects to a nation. Security may tighten and the nation may come under full alert, but life will go on. People will all over the world still buy their groceries, go to work, and live their lives. Unless it’s a worldwide scale, the economic impact of terrorism will not be too heavy for a nation to be put down for long.

Created by : Joan
Published : 04 Aug 2016

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