Asian leaders expressed concern yesterday that the terrorism attacks in the US could inflict a new blow on their fragile economies.
But as share markets slumped across Asia, experts said that while there would be short term damage from the hijacked plane strikes in New York and Washington, the atrocities should not inflict long term economic harm.
Exporters such as Japan, South Korea and Singapore, which rely heavily on the US market, were most worried about an economic backlash from the terrorism.
South Korea's President Kim Dae-Jung said: "I think this catastrophe will have a tremendous negative effect on the economic and security environment of the world."
His Finance Minister Jin Nyum urged markets not to panic and promised to find emergency funds to stabilise the economy.
The Japanese authorities also pledged every possible measure to calm markets about the impact on the world's ailing number two economy.
Prime Minister Junichiro Koizumi said Tokyo would "take appropriate measures so that confusion would not emerge in the global and Japanese economic systems."
Finance Minister Masajuro Shiokawa spoke on the telephone to US Treasury Secretary Paul O'Neill and said the two agreed to monitor market movements and take appropriate action.
"I talked about preventing the markets from becoming unstable through cooperation between Japan and the United States."
O'Neill, who arrived in Tokyo on Tuesday, had been due to meet his Japanese counterpart yesterday but the talks were cancelled following the terrorist attacks.
The attacks also overshadowed talks between economic ministers from Asia and Europe in Hanoi.
Japan's Economy, Trade and Industry Minister Takeo Hiranuma expressed alarm over the implications for the world economy already confronting a worsening slowdown.
"I recognize it is a very, very serious situation," he said.
Analysts predicted immediate panic but not longstanding damage from the attacks.
Bob Broadfoot, managing director of the Hong Kong-based Political and Economic Risk Consultancy Group, said it was important to look at the "much bigger, broader picture".
Lots of elements could affect China's economy indirectly through global issues such as the WTO, he said.
"You have to look at the broader issues. I don't think it will affect at all China's attempt to join the WTO," he said. "But how will it affect the WTO itself? We just don't know."
Exporting nations expected a heavy toll on their trade with the United States however.
South Korean trade officials said exports including semiconductors and electronic parts would fall by 2.5 million dollar every day due to suspended flights to the US.
Singapore's manufacturing sector fears a US recovery by the end of the year will now be pushed back.
"Basically there won't be a US recovery. It's not going to happen," said SG Securities regional economist Arjuna Mahendran, adding the Singapore economy is expected to contract by 1.5 percent from a previous forecast of minus 0.5 percent.
Trade-dependent Singapore grew close to 10 percent last year but is now in a recession following the slowdown in the US economy.
Electronics orders from US customers typically pick up just before Christmas but this is not likely after the terrorist attacks, economists said.
"Any pre-Christmas orders will be miserable. It will hurt their consumers' spending which is already on the borderline case," said Chia Woon Khien, a regional economist at ING Barings.
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