Economic impact of terrorism is decreasing. The cost of terrorism has reached 89.6 billion dollars in 2015, it decreased by 15 percent from 2014. It as well reflects the overall decline in the number of people killed by terrorism. Still, the 2015 economic impact of terrorism was still at the second highest level since 2000. The economic losses caused by terrorism approximately increased by 11 times in the last 15 years. World has seen two peaks in the economic impact of terrorism and now we are living with the third one. First significant impact of terrorism started in 2001 after 9/11 attacks, second peak took place in 2007 and main cause was the peak in the Iraq war. In 2001 the economic impact of terrorism costed globally 10 billion dollars as in 2007 it has reached 37 billion dollars. The present peak from 2014 to nowadays has the biggest impact on economics with the highest 106 billion dollars a year, so from 2001 to 2014 losses to terrorism risen by 96 billion dollars. The figures shows how economy can suffer from terrorism. In the years 2015/2016 transnational terrorism has widely touched peaceful countries, including OECD states.
How the economic impact of terrorism is calculated? It is calculated using Institute for Economics and Peace methodology. Which includes the direct and indirect cost of deaths and injuries as well as the property destruction from incidents of terrorism. The direct cost includes costs borne by the victims of the terrorist acts and associated government expenditure, such as medical spending. Indirect costs include lost productivity and earnings as well as the psychological trauma to the victims, their families and friends. Unit costs for deaths and injuries are sourced from McCollister et al (2010).
Ten most terrorism affected countries are all conflict-affected countries. Countries from Middle East and North Africa, Sub-Saharan Africa and South Asia. The largest economic impact from terrorism was felt in Iraq, which loses 17.3 of GDP every year that is almost a quarter of entire Iraq’s economy, in second place is Afghanistan with 16.8 percent. The most interesting is that economic impact of terrorism is significantly small compared to the other forms of violence at the global level in 2015. The impact of violence costs 13.6 trillion dollars or 13.3 percent of GDP globally.
Denise-Marie. Ordway. Martin Maximino Journalist’s Resource (2015). The Relationship between terrorism and economic growth: Research. Available at: https://journalistsresource.org/studies/international/conflicts/relationship-between-economic-growth-terrorism-new-research (Accessed: 13th April, 2017).
Joe Myers, World Economic Forum (2015). What is the economic impact of terrorism? Available at: https://www.weforum.org/agenda/2015/11/what-is-the-economic-impact-of-terrorism (Accessed: 13th April, 2017).
National Consortium for the Study of Terrorism and Responses to Terrorism (No Date) Available at: http://www.start.umd.edu (Accessed: 13th April, 2017).
Institute for Economics and Peace (2016) Global Terrorism Index. Available at: http://economicsandpeace.org/wp-content/uploads/2016/11/Global-Terrorism-Index-2016.2.pdf#page=64&zoom=auto,-20,516 (Accessed: 13th April, 2017).