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World Bank warns that poverty will rise in wake of terrorist attacks on US

World Bank warns that poverty will rise in wake of terrorist attacks on US

The recent terrorist attacks against the United States will hurt economic growth in developing countries, condemning as many as 10 million more people to live in poverty next year while hampering the fight against childhood diseases and malnutrition, the World Bank said today.

In a preliminary economic assessment of the 11 September attacks, the Bank estimated that developing country growth would fall from 5.5 per cent in 2000 to 2.9 per cent in 2001 as a result of slowdowns in the US, Japan and Europe. An additional 20,000 to 40,000 children under five years of age could die from the economic consequences of the attack as poverty worsens.

"We have seen the human toll the recent attacks wrought in the US, with citizens from some 80 nations perishing in New York, Washington and Pennsylvania," said World Bank President James D. Wolfensohn. "We estimate that tens of thousands more children will die worldwide and some 10 million more people are likely to be living below the poverty line of $1 a day because of the terrorist attacks."

Already, there are signs that higher costs and reduced economic activity are putting a damper on global trade, according to the World Bank. Insurance and security costs and delays at customs clearance are among the main factors pushing up the costs of trade. Tourism has been hit exceptionally hard. The Bank estimated that 65 per cent of holiday trips booked for the Caribbean have been cancelled and warned that the Middle East is also likely to suffer a sharp decline in tourism revenues.

World Bank Chief Economist Nicholas Stern stressed that all countries must be vigilant to ensure a global rebound. He called for swift and bold policy responses because of the heightened level of risk to the global economy. "Maintaining world trade is more important than ever, especially in the face of an economic slowdown which is often accompanied by pressures for increased protectionism," he said.

The Bank pledged to "do its part," noting that its managers and staff - many of whom are stationed in developing countries - have been in contact with high-level officials to assure them of the Bank's continued commitment to deliver on previously agreed programmes, and to offer help in minimizing adverse impacts from the heightened uncertainty, risk, and volatility in the current global economic environment.