The Conference Board of Canada says that the economic fallout from the recent terrorist attack in the United States will be significant, but it will not be sufficient to drive either Canada or the U.S. into a full-blown recession.

The sectors most adversely affected include transportation, tourism and financial services. Real GDP growth in Canada will be lowered by about 0.4% at annual rates in the last half of 2001, leading to virtually no growth in the third and fourth quarters of this year. In the U.S., the third quarter will see a decline in real GDP and the fourth quarter will return a small positive growth rate.

The Conference Board says that this report should be seen as an initial assessment because many of the facts needed to do a more in-depth and integrated impact analysis are not yet available.

“It is with great reluctance that we turn to the task of attempting to measure the economic fallout from this attack,” said Paul Darby, director of economic forecasting with the Board. “The terrorist attack on the World Trade Center in New York, and on the Pentagon in Washington D.C., caused an enormous loss of life. The senselessness of the act and the dimensions of the tragedy are difficult to fathom.”