Economic Impact of Brussels Attacks Probably Limited, Smets Says

  • Belgian bank governor says terror may trigger greater spending
  • Smets says it's too early to say whether tourism will be hit

The impact of last month’s deadly terrorist attacks on Belgium’s economy is likely to be restricted to the immediate aftermath, said Jan Smets, governor of the country’s central bank.

“At the macroeconomic level, the impact of the attacks should be rather limited and short-lived,” Smets, a member of the European Central Bank’s Governing Council, said in an interview in Frankfurt on Thursday. “Going forward, the attacks may furthermore have an impact on public policy; on the fiscal side, there may be higher security expenditures.”

The blasts, at the airport and a downtown subway station on March 22, for which Islamic State claimed responsibility, prompted authorities to increase security patrols across the city. More than two weeks after the bombings killed 32 people, flights in and out of the Belgium capital are are still limited. Prosecutors on Thursday appealed for help in tracking down the presumed leader of the airport blasts, who fled the scene.

“The two-week closure of Brussels airport, which accounts for about 0.8 percent of Belgium’s annual GDP, when taking into account all airport-related services, will inevitably weigh on economic activity,” Smets said. He said it was too early to say whether tourism, which represents about 2.5 percent of the country’s exports, would be affected.

“While in the first hours following the attacks the shock was still prevailing, the following day I have witnessed Belgian citizens’ determination not to let these events derail their daily lives,” Smets said.

Belgium’s economy will grow by 1.3 percent in 2016, , according to the European Commission’s latest forecasts, slower than the 1.7 percent increase in gross domestic product projected for the euro area as a whole. Smets said there was no indication that the terror attacks would cause GDP to grow more slowly in the first quarter of this year than had previously been expected.

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