Too soon to draw conclusions on impact of ISIS' Paris attacks, Barclays says

It is too soon to draw conclusions about the macroeconomic impact of the recent escalation of tensions involving Isis, according to economists.

Other recent attacks, including those on Beirut and the downing of a Russian airliner over Egypt, "show that the threat from Isis is intensifying and spreading and that "geopolitical risk" is a growing downside risk to global growth. Therefore, any comparison with previous terrorist attacks such as in Madrid in 2004 and in London in 2005 is not necessarily relevant," economists at Barclays said on Tuesday morning.

That stands in contrast to remarks from European Central Bank board member Vitor Constancio and chief economist Peter Praet on Monday, when they pointed out that these types of events generally have a transitory effect on the economy.

The impact on consumer confidence - in a context in which consumption is the main driver of growth - stands out as one possible risk for Europe, although activity in Paris seems to have recovered quickly, the bank said.

Tourism on the other hand "could be hurt more durably, and in that respect it is likely that French Q4 GDP growth will be affected."

"Longer-term effects are more uncertain, especially given the high uncertainty regarding the reaction of the international community and its ability to strengthen cooperation in the fight against terrorism, as well as political reactions and actions in the different member states."

To the above, one must add the implications of the host of measures approved by French authorities in the wake of the attacks, some of which may help to shore up confidence and will boost economic activity through increased spending on the country's security apparatus, Barclays's Philippe Gudin said in a research note sent to clients.

"Of course, the evolution of military action in Syria and the ability to weaken Isis in the coming months also will be critical for confidence."

Despite the above, for now at least Gudin stuck to his forecasts for Eurozone GDP to grow by 1.5% in 2015, strengthening gradually to 1.6% in 2016 and 1.8% in 2018.