After Paris: The attacks' economic toll

Dec 08, 2015, 12:24 PM EST
The Eiffel Tower in Paris, France
Tom Bricker/flickr
Last month's terrorist attacks in Paris killed 130 people and scarred the nation. In France -- the world's top tourist destination with 83.7 million visitors last year -- fear has rippled through the economy causing confidence and spending to drop. On Tuesday, two sources put exact figures to this decline.
Air France-KLM Airlines reported that the Paris attacks caused its revenues to fall by $54 million in November as people cancelled trips or avoided purchasing flights to and from the capital city. However, the firm thinks the dip will be short-lived, saying "Current booking trends are in line with a progressive recovery including a very limited impact on volumes after the end of December 2015."
And the Bank of France cut its forecast for fourth-quarter GDP growth from 0.4% to 0.3%, in large part due to the drop in hotel bookings and restaurant revenues following the terrorist attacks. And monthly business sentiment surveys showed slight declines in the services and manufacturing sectors.
Sebastien Bazin, CEO of Accor, France's largest hotel chain, said last week that he expects a “real economic impact” of the attacks on hotels in Paris with a dip in demand likely to last between two and four months.
High-profile events were delayed or scaled back following the attacks. A three-day conference of French mayors expected to bring 30,000 people to Paris and originally set for late November was postponed until May of next year. True, the U.N. conference on climate change being held in Paris has stuck to its timeframe. But due to security concerns, the French government ordered the conference to be scaled back to the bare essentials, resulting in over 200 planned events being canceled around the city, according to the New York Times.
The effects are felt beyond Paris as well, as Lyon canceled its annual festival of lights, which typically draws 2-3 million people in early December.
Tourism accounts for 2 million jobs in France as well as 7.3% of GDP, and the Paris attacks have already lead to a larger and longer-lasting hit to the sector than the Charlie Hebdo attack in January. (But although the French stock market initially dropped, it quickly regained the ground it had lost.)
Tourism, and the French economy more broadly, will recover before too long -- but not if there is another high-profile attack. The extra security put in place can soothe concerns, but if more tourists are targeted it will lead to a long-term drop in the sector. Then troubling broader questions could no longer be delayed, such as permanently reintroducing national border controls, tighter security checks throughout the country, raids in restive Muslim areas, and perhaps an end to accepting immigrants from Syria and elsewhere. Let's hope it doesn't reach that bleak point.