The Economic Impacts Of The Paris Attacks

While the Paris attacks are a tragedy that does not lend itself easily to quantification, experts are coming up with calculations on just what the terrible events of late November cost the city and the world community.

So, were there economic losses associated with the attack?

According to BBC reports, the answers are yes (in the short term) and probably (in the longer term).

The biggest short-term effect is on tourism, which France, in general, and Paris, specifically, rely on for 7 percent of economic activity and 2 million jobs, according to the Tourism Promotion Council. Brussels tourism has also taken a hit, with 40 percent of local hotel bookings cancelled during the security lockdown of that weekend.

Other evidence of an immediate economic effect in France came via a regular business survey by Markit. Businesses have been reporting slowdowns, while consumers are complaining of damaged confidence.

However, such effects in the immediate aftermath are common and tend to mitigate themselves as time goes on.

“Usually, these sorts of events have a transitory effect on the economy, so this is not a priori a reason to change the way we see the evolution of the European economy,” said Peter Praet, a member of the executive board of the European Central Bank.

As for longer term effects, so far, that is less clear. Though the French stock market did take a hit right after the attacks, stock prices have since recovered and gained new ground.

But there have been signs that suggest that the economic effect here could be worse than short-term, especially given the general fragility of the Eurozone in the last year.

“It’s clear these sort[s] of events do not help restor[e] confidence in the recovery, so this is something we will watch,” Praet told Bloomberg.

This concern was also expressed by the chief executive of the German industrial giant Siemens, Joe Kaeser, in an interview with Financial Times. “My biggest concern is the fallout of the geopolitical distress. We’ve seen a new quality with the sad events in Paris. And people who are not in a good mood are not going to invest, because investing is about believing, about looking forward, about the future.”