January 30, 2004

By Sapa-AFP

Chicago - Worries about terror attacks and other political risks had cost the global economy more than $800 billion in 2003 by cutting corporate spending, investments and growth, according to a survey by US insurance firm Aon released on Wednesday.

That compared with an estimated $200 billion prior to the September 11 2001 attacks.

Aon economist Michel Leonard said the global cost of political risk could reach $1 trillion this year, claiming that this uncertainty imposed the equivalent of a 0.25 percentage point "geopolitical tax" on global economic growth. He said the combination of terrorism and traditional political risks substantially decreased the risk tolerance of investors, exporters and bankers. The impact was particularly severe on emerging markets, Leonard said, while the dollar's recent weakness made the currency increasingly vulnerable to geopolitical uncertainties.