WTC attack to spawn a trade divide: analyst

The shock of September 11 will compel companies to adopt more insular trading policies, dividing the world into two distinct trading camps, Gartner told delegates at its annual Symposium/IT Expo in Brisbane this week.

Calling the World Trade Centre attack an act of "economic vandalism", Gartner analysts prophesised that companies with a strong US presence or US business ties will gradually withdraw trade links with potentially high-risk regions like most of the Middle-East and with Asia-Pacific region countries such as Malaysia, Indonesia and the Philippines.

"Companies will continue to invest in those countries they perceive as stable and growing. But countries that have the risks of potential instability, a volatile currency or lacklustre growth prospects will be off the map for most multinationals," said Bob Hayward, Gartner senior vice president of business development and research Asia Pacific.

The world's economic engine, the US is experiencing some of the worst consumer sentiment in years. Hayward said September 11 had dragged consumer confidence down to an all-time low, and in turn, the dotcom fallout and IT industy sector's decline since had forced 1.5 million people in the US out of work this year so far.

Compounding the economic battering, he said, are fears of an anthrax plague and trillions of dollars lost on stock markets in the past 18 months.

Diagnosing the current economic health of the Asia-Pacific region, Hayward said the plight of Asian tigers like Singapore, Korea and Taiwan "looked bad". With Japan in its fourth year of recession in 10 years and these countries relying heavily on the US and Japan as a key export partner, all were suffering, he said.

The Singaporean economy was hurting the most, experiencing 10 per cent contraction per year.

Against this backdrop, Hayward said Australia would be foolish to believe its own economy could power along untouched, "just as it did through the Asian economic crisis of '97, with many pundits predicting more than 3.5 per cent growth in GDP in 2001".

All the more alarming for the status quo here, he warned, was the collapse of several prominent Australian companies including HIH, One.Tel. Harris-Scarfe, Pasminco and Ansett Airlines.

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