In addition to human losses, Terrorism erodes through world economy

Shaimaa Hefzy

The threats of terrorism in any region is associated with the number of negative social and economic consequences.

Anti-terrorism efforts around the world are exploring how to eradicate violence, and to localize development in those societies that are still suffering from extremism or recovering from it.

The impact of terrorism on society and economy has soared in the past decade. According to a report by professional services firm Marsh, alongside more victims, terrorism now comes with an economic cost of $83 billion per year, four times the value in the years before the financial crisis.

Terrorist activity has systematically grown since the turn of the century, driven by a range of extremist ideologies.

In the years before and after the September 11 attacks in the United States, the economic cost of terrorism hovered well below the $20 billion barrier. By 2014, the global economic cost rose to nearly $100 billion, mainly due to a rapidly deteriorating situation in Iraq and Syria, and the emergence of Daesh.

Prime Minister Narendra Modi said on Thursday at the BRICS Summit in Brasilia that terrorism has caused USD 1 trillion loss to the world economy and the atmosphere it created has indirectly and deeply harmed trade and business.

Despite these developments, in more recent years the number of terrorist attacks globally has subsided. Last year, 15,819 attacks resulted in 13,570 fatalities, down from 21,274 attacks and 45,081 fatalities in 2014, according to the report.

The predominant threat globally is from Islamist extremists focused on inflicting mass casualties in low-capability attacks on crowded public spaces.

Between 2014 and 2018, more than half of global terrorist attacks on public areas occurred in the Middle East and North Africa (MENA). Terrorist attackers are mostly affiliated with a number of groups, including Daesh, Hay’at Tehrir al-Sham, Hezbollah, Al-Qaida and Ansar al-Sharia Libya.

However, one finding the researchers have uncovered is that the terrorist landscape is diversifying. Africa too is seeing terrorism impact the daily lives of its people. Mozambique for instance faces an emergent terrorism risk in its northern Cabo Delgado province, while Chad faces increased activity by insurgents in the north as well as Libya-based militants.

According to the authors, governments should strengthen their anti-terrorist policies, while organizations should implement adequate risk and crisis management strategies to protect their people and balance sheets from the persistent threat of terrorism. They should also consider terrorism insurance in order to cover the economic costs when such an event happens.

Compared to other forms of violence such as homicide, armed conflict, and military expenditure, terrorism is a small percentage of the total global cost of violence, which was equal to $ 14.1 trillion in 2018. However, the true economic impact of terrorism is likely to be much higher as these figures do not account for the indirect impacts on business, investment, and the costs associated with security agencies in countering terrorism.