The economic cost of Paris Attack.
- By: Carlos Jurado.
- 10 dic 2015
- 3 Min. de lectura
A total of 130 dead and 352 wounded people left the terrorist attack of the Islamic State in Paris last November 13. Considered as the worst event in the history of Paris by the media such as NBC, BBC and the New York Times, the attack not only leaves the country with human losses but also economic losses and financial uncertainty.
Starting with the area of tourism, Paris is considered one of the main destinations in the world. According to the Tourism Promotion Council in France (2014) tourism is the French major asset and is considered as a strategic sector of the French economy, accounting for over 2 million jobs and 7% of GDP. France also is the world's leading destination with 83.7 million tourists in 2014 according the same website.
Since Paris attacks thousands of soldiers and police officers are safeguarding security in the most important touristic places, including the Eiffel Tower. Paris is suffering a steep fall in tourists after the Friday 13. “It’s very quiet” said Carolina Cabrera (2015) while she was walking through the downtown of the city. As her many other tourists have booked their trip to Paris but many of them prefer not to travel. As tourism is one of the highest incomes of France it is expected to continue dropping until December of this year. In the hotel sector, for instance, there is a drop of 57% according to Synhorcat (2015).
“Air France refused to comment on passenger numbers and cancellations bound for Paris. But on Tuesday, the low-cost airline EasyJet said that demand for travel to Paris had fallen off”. (Thomson, 2015).
For the sector of the stock market the scenario is the same. After the attacks in Paris many European stock exchanges opened with losses. The Paris CAC opened with -1.18%. Tourism businesses and airlines companies, especially those from France were the most affected. “Air France has lost more than 5.9 % of its value while the hotel chain Accor has fallen 4.4%” (El Pais, 2015). At the end of the day, Monday 16, stock exchanges recovered a few.
The initially drop and the low recovery of the stock market in the continent is not only because of the recent attacks but also by the constant threats that other allies countries received from the IS. The environment of uncertainty has increased in the region during the past two weeks that stock exchanges such as London FTSE and Frankfurt DAX registered a relatively small growth compared with the losses of about -0.59% and -0.87% respectively they suffer last week.
Experts in the area of finance and investment quoted the following:
"Events of the dimension of the terrorist attacks in Paris create uncertainty and doubt among investors that, at least in the short term, can result in declines in sales, risk assets, stock exchanges and private bonds". (Santos, 2015).
“French private sector output growth weakened slightly in November, with the Paris attacks reported to have hit activity among some service providers”. (Kennedy, 2015) senior economist at Markit.
Events such as this attack alter and downturn nation’s economy. The economic cost of terrorism is now evident in areas of tourism specially and could bring future implications for the future of the Eurozone such as the close of French borders. While the stock exchange is in a recovery processes, touristic businesses must work hard and implement an action plan to avoid current and future losses in the sector.
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