Deaths from terrorism accounted for 81 per cent of the global economic impact of terrorism. Indirect GDP losses, the second largest category at 15 per cent of the total, is only calculated for countries with more than 1,000 deaths. Property destruction is estimated at two per cent of the global economic impact of
FIGURE 6.2 BREAKDOWN OF THE ECONOMIC IMPACT OF TERRORISM, 2016 Fatalities account for 81% of the economic impact of terrorism.
terrorism. However, property cost estimates are missing for a large number of incidents. Finally, the economic impact of injuries from terrorism was one per cent of the total economic
Property destruction 2% GDP losses
impact of terrorism. Figure 6.2 shows the breakdown of the
15%
economic impact of terrorism. The economic impact of terrorism is smaller than many other forms of violence, accounting for approximately one per cent of the global cost of violence in 2016. This was estimated at
Injuries 1%
$14.3 trillion or 12.6 per cent of global GDP. But this estimate
Deaths
81%
of the cost of terrorism is conservative as the indirect effects of terrorism are only calculated for countries that suffer from higher levels of conflict. This is a very conservative estimate of the costs associated with terrorism and only calculates globally quantifiable and comparable costs. It does not take into account the costs of counter terrorism or countering violent extremism, nor the
Source: IEP
impact of diverting public resources to security expenditure away from other government expenditure. Nor does it calculate any of the long term economic implications of terrorism from reduced tourism, business activity, production and investment. Studies from developed and developing countries have tried to quantify at a more granular level the adverse effects of terrorism on the economy. For example:
...the global cost of violence in 2016 was estimated at $14.3 trillion or 12.6 per cent of global GDP.
After the outbreak of terrorism in the Basque country in Spain in the late 1960s, economic growth declined by ten per cent.3
A study of the economic impact of terrorism in Israel found that per capita income would have been ten per
The level of economic disruption is relatively large and long lasting for small and less diversified economies. In contrast, advanced and diversified economies are economically more resilient and have shorter recovery periods from incidents of
cent higher if the country had limited terrorism in the
terrorism. These effects are mainly explained by the ability of
three years up to 2004.4
the diversified economies to reallocate resources, such as labour
Results from research on Turkey show that terrorism has severe adverse effects on the economy when the economy is in an expansionary phase.5
and capital from the terrorism affected sectors. Advanced and more peaceful countries also have more resources and better institutions to avert future terrorism.
GLOBAL TERRORISM INDEX 2017 Â| Economics of Terrorism
82