Spain’s tourism companies seem to have jackknifed on a very slippery road as their profits skidded into an overall plunge in the course of 2002.

Latin America and Caribbean economies will put on the worst shrinking numbers of the last twenty years with a 1.1 percent overall plunge, according to a World Bank report issued yesterday in Washington. The financial crisis in Argentina –the worst of all time in the country- and its ripple effects on neighboring nations like Uruguay and Paraguay, put growth on hold and pushed foreign investment down in the region for a fifth year in a row.

The predicaments souring the tourist sector all around the globe have forced some European companies to sell out part of their assets the chains themselves have labeled as “non strategic.” NH Hotels sold four establishments earlier this year in order to earmark 30 million euros for a recently opened four-star resort in Stuttgart, Germany.

After coming unwillingly apart at the seams, the sun might be breaking through at last for Sol Meliá. All through the year, the financial situation of this major hotel chain has been a cliffhanger. The numbers posted in the first half of the year speak volumes of the impact sustained as a result of the ongoing crisis in the tourist sector. According to Spanish media outlets, the company’s revenues dipped by 3.3 percent, a loss of up to 477.7 euros.

Varig’s aircraft –the largest Brazilian airline- could get grounded. The crisis now sweeping the air travel sector following the 9/11 terrorist attacks took its toll on an airline that’s been losing cash since 1998. And the strong devaluation of the Brazilian currency has just given the carrier a coup de grace. In recent months, Varig’s debt has soared to $900 million and is now threatening payment suspensions.

The tragic events in New York, Washington DC and Pittsburgh on 11 September clearly have massive human and political implications. In addition, the terrorist attacks potentially have serious economic implications, not only for the US but internationally. This note summarises OEF’s initial assessment of the economic impact of the attacks. While it is still too soon to be able to be able to judge with much confidence the likely scale of these economic effects, there are some precedents on which we can draw, such as the 1990 Gulf War.