Chart of the week: The economic impact of terrorism declines
While terrorism is still a threat worldwide, the economic impact of the phenomenon has been declining.
On a global scale, the economic impact of terrorism declined by 42 per cent between 2016 and 2017, the third consecutive year of this downward trend.
In 2014, the global economic impact of terrorism hit its highest point at $US108 billion. In 2017, it totals at US$52 billion and is worth less than half of its peak impact.
The decline is consistent with the slowdown in terror-related deaths committed by Islamic State of Iraq and the Levant.
To calculate the economic impact of terrorism, the Institute for Economics and Peace uses the number of deaths, injuries, level of property destruction, and losses in economic activity where terrorism causes more than 1000 deaths.
Deaths account for 72 per cent of the global economic impact of terrorism. Indirect GDP losses are the second largest category at 15 per cent of the total. IEP estimates that property destruction is worth two per cent of the global economic impact of terrorism. However, property cost estimates are missing for a large number of incidents.
These calculations are conservative. The model’s costs include the globally available quantifiable and comparable data and do not take into account the costs of counterterrorism or countering violent extremism, nor the impact of diverting public resources to security expenditure away from other government activities. The longer-term economic implications of terrorism from reduced tourism, business activity, production and investment are not calculated.