Political instability cost $800 billion in 2003

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Political instability cost $800 billion in 2003

The threat of terrorism and other problems of political instability cut corporate spending and investment by $800 billion in 2003, a new report claims.

In 2001, prior to the September 11 disaster, that figure was just $200 billion, the survey suggests.

Risk management consultants Aon suggest in their new report, that the cost of uncertainty is equivalent to a 0.25 percentage point "geopolitical tax" on global economic growth.

"In addition to concerns over terrorism, 2003 saw the return of traditional geo-political risks such as general strikes in Nigeria, political insurgency in Venezuela, and the war in Iraq as major drivers of economic performance", Aon economist Michael Leonard warned.

The impact has been particularly heavy in the developing markets of Latin America and the Caribbean, which were hit very hard by the crisis in Argentina.

Mr Leonard added that the weakness of the dollar amplifies the vulnerability of the dollar, and reduces the risk tolerance of US investors.

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