The September 11th terrorist attacks against the US could have a negative impact on the insurance and defence sectors as well as on world trade, the OECD warned.
In a study on the economic impact of the attacks, the OECD said that just a few months after September 11th, economic activity was growing once again and financial markets had largely recovered.
However, it said that beyond this short-term rebound, "medium-term consequences should not be under-estimated", particularly on insurance, defence and trade.
While no major bankruptcy has occurred in the insurance sector despite losses estimated at $30-58 billion as a result of the attacks, "the capital base of many insurance firms has been hit, and it is likely that several businesses would not be able to withstand another, similar shock", according to the study.
The OECD said that eventually, insurance coverage of terrorism risk may be restored, warning that government support in the meantime "should be considered with caution and limited in time and scope".
On defence, the study said that while increased military and security spending can give a short-term boost to the economy, it creates a longer-term risk of crowding out activity in other sectors.
The OECD said that following the attacks, customs and port procedures have already become more time-consuming, and air freight costs have risen.
With pressure mounting for tighter surveillance of goods, as well as migrants, at borders, costs in other areas of trade may also rise, the study said.
PA