The economic impact of the September 11 terrorist assaults will plunge another 10 million people into poverty next year, the World Bank said in a report Monday.
"We have seen the human toll the recent attacks wrought in the US, with citizens from some 80 nations perishing in New York, Washington and Pennsylvania," said World Bank president James Wolfensohn.
"But there is another human toll that is largely unseen and one that will be felt in all parts of the developing world, especially Africa," he said in a statement.
"We estimate that tens of thousands more children will die worldwide and some 10 million more people are likely to be living below the poverty line of one dollar a day because of the terrorist attacks."
The World Bank's preliminary economic assessment was based only on expected loss of income, he said.
"Many, many more people will be thrown into poverty if development strategies are disrupted," Wolfensohn said.
The first humanitarian aid to enter Afghanistan since the terrorist attacks, which had halted shipments, reached the capital Kabul on Monday, UN officials said in Peshawar, Pakistan.
Slower growth and recessions would hit the most vulnerable people in developing countries the hardest, the World Bank report said.
"The Bank estimates that an additional 20,000-40,000 children under five years old could die from the economic consequences of the September 11 attack as poverty worsens," it said.
Before the attacks, the World Bank expected developing country growth to fall from 5.5 percent in 2000 to 2.9 percent in 2001 as a result of the worldwide slowdown before rebounding to 4.3 percent in 2002.
But as the terrorist attacks delayed rich countries' recovery into 2002, the World Bank said it believed developing countries' growth could be cut by 0.5-0.75 percentage points in 2002.
The effects of the attacks on world trade were already being felt, it said.
"Insurance and security costs and delays at customs clearance are among the main factors pushing up the costs of trade," it said. Major shipping lines had increased freight rates to India by 10 to 15 percent.
Tourism had been pounded.
"Around 65 percent of the holidays booked for the Caribbean have been cancelled," the World Bank said. "The Middle East is also likely to suffer a sharp decline in tourism revenues during the coming winter."
And as investors fled to safer havens, the already-weak flow of capital to developing countries would decline further.
"The worst hit area will be Africa, where in addition to the possible increases in poverty of two-three million people as a result of lower growth and incomes, a further two million people may be condemned to living below a dollar a day due to the effects of falling commodity prices," the World Bank said.
Commodity prices were forecast to fall 7.4 percent on average this year even before the attacks.
Oil prices were now at 22 dollars a barrel, down five dollars from before the attacks, it said, possibly setting the stage for lower agricultural and metals commodity prices next year.
"For economies that are dependant on commodity exports, particularly for cotton and beverage exporters, this portends a potentially large terms of trade shock over and above the impacts of slower growth in GDP."
World Bank chief economist Nicholas Stern said vigorous policy action was required.
"Policy responses have to be swift and somewhat bolder in rich and poor countries because of the heightened level of risk to the global economy and they have to be vigilant because the uncertainties associated with future political and military events are unusually large," he said.
He called for increase in foreign aid to make up for a shortfall in private investments, a reduction in trade barriers, and greater coordination among donors. |
