By Philip Thornton, Economics Correspondent Published: 11 September 2006
As economists stared aghast at TV images of the wreckage of New York's Twin Towers after the attacks of September 11, it was hard to imagine the world was about to embark on its biggest boom for a generation.
However, five years on, it looks clear that a global economic collapse was the dog that did not bark. At the time, many forecasters worried that that the events of 9/11 would deliver a shock to the US economy that would reverberate around the world. Trade would collapse, as would airline travel, while unemployment would rise sharply as businesses found their demand shrinking and their cost bill for security and associated services mushrooming.
In fact the world economy has grown above 4 per cent in each of the past three years and is forecast to do so again this year - the first time this has happened since the early 1970s.
Stephen King, managing director of economics at the investment bank HSBC, said: "People at the time misinterpreted the impact of 9/11 because they saw it as the trigger for the recession."
He says that the events of 9/11 and unity that it engendered across the US political landscape gave support to the massive cuts in interest rates and taxes allied with a surge in defence spending that delivered a massive cash injection into the US economy.
Foreign direct investment had already peaked in 2000 and had embarked on a downward trend, according to figures from the Economist Intelligence Unit.
Stephen Lewis, the chief economist at Insinger de Beaufort, said a sharp slowdown in the US economy over the coming years could be seen as a delayed consequence of 9/11: "Generally these exogenous shocks tend to have short-term impact and after a fairly short period of time the effects are no longer evident. The shocks that cause damage are more endogenous ones where people make policy mistakes and impacts can run a long time, as we may be about to see."
However there are concerns that the train of globalisation has slowed since 2001. World trade talks that were launched in November of that year as a symbol of unity have since failed and economic nationalism has reared its head in the US and Europe.
As economists stared aghast at TV images of the wreckage of New York's Twin Towers after the attacks of September 11, it was hard to imagine the world was about to embark on its biggest boom for a generation.
However, five years on, it looks clear that a global economic collapse was the dog that did not bark. At the time, many forecasters worried that that the events of 9/11 would deliver a shock to the US economy that would reverberate around the world. Trade would collapse, as would airline travel, while unemployment would rise sharply as businesses found their demand shrinking and their cost bill for security and associated services mushrooming.
In fact the world economy has grown above 4 per cent in each of the past three years and is forecast to do so again this year - the first time this has happened since the early 1970s.
Stephen King, managing director of economics at the investment bank HSBC, said: "People at the time misinterpreted the impact of 9/11 because they saw it as the trigger for the recession."
He says that the events of 9/11 and unity that it engendered across the US political landscape gave support to the massive cuts in interest rates and taxes allied with a surge in defence spending that delivered a massive cash injection into the US economy.
Foreign direct investment had already peaked in 2000 and had embarked on a downward trend, according to figures from the Economist Intelligence Unit.
Stephen Lewis, the chief economist at Insinger de Beaufort, said a sharp slowdown in the US economy over the coming years could be seen as a delayed consequence of 9/11: "Generally these exogenous shocks tend to have short-term impact and after a fairly short period of time the effects are no longer evident. The shocks that cause damage are more endogenous ones where people make policy mistakes and impacts can run a long time, as we may be about to see."
However there are concerns that the train of globalisation has slowed since 2001. World trade talks that were launched in November of that year as a symbol of unity have since failed and economic nationalism has reared its head in the US and Europe.
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