The historic Paris attacks have sent the world in a state of panic, causing people from all over the world to express reactions of fear, anger and sorrow. Although the loud bombings are over and the shenanigans have somehow wavered, analysts said that the chain of effects is not over yet as stock value and oil price are predicted to decline.
The attacks, which took place on Friday night, Nov.13 and left more than a hundred casualties, have left investors worrying about consumer spending confidence and the general impact on global economy.
The attacks may dissuade tourist from going to France hence major airline companies, tourist attractions and related businesses may suffer, weakening the euro.
Oil fields are not directly affected and for this, production is not a problem. However, the demand for gasoline and jet fuel could witness a decline because people may opt to cancel their trips. With this, oil prices would also plummet as business owners continue to fear that demands will drop.
Experts said investors could anticipate turbulence in insurance, travel and leisure sectors as well.
While these setbacks may seem pretty obvious and inevitable, experts said it would not last long. Howard Archer, an IHS Global Insight analyst in the UK explained that as horrific the situation may seem, economic activity does not tend to persist. "At the end of the day, people have to get on with their lives," he said.
Sam Stovall, equity strategist for S&P Capital IQ in the United States said that the economic events in Europe will have an impact on the U.S. stock market as he predicts a two percent drop on Monday, Nov. 16. He said, however, that it is not something that would cause Europe to experience recession. He also predicted that stocks can fully recover after a week.
Terrorism partially induces harm to economic growth by driving people away from businesses and keeping them from doing their daily routine, including buying train tickets, shopping and eating at restaurants, among many others.
Human workforce may also be affected as Jack Ablin from BMO Private Bank said that countries might restrict their borders, even in young immigrants who can fill jobs due to security reasons. Such may create social and economic issues within the European Union.
"The European Union and the eurozone were designed under more or less placid times," said Ablin. "Now, it's coming under duress from a lot of different angles."
Photo: Garry Knight | Flickr
