By ramming home yet again the randomness of presumed political violence, the bombers who killed nearly 200 people on Bali could take a heavy toll on that most elusive ingredient of global economic growth -- confidence.
The impact of the deadly attacks on the hitherto tranquil Indonesian resort island, condemned as terrorism by US President George W. Bush, will obviously be felt most keenly in Southeast Asia if investors take fright at the prospect of spreading instability in the region.
"It wouldn't take much at this point to get America afraid of terrorism again," said Chris Rupkey, senior financial economist at Bank of Tokyo/Mitsubishi in New York.
"People are clearly nervous. You're battling quite a negative psychology for the economic outlook here," Rupkey said.
Confidence is the elixir of growth, and it is already in short supply everywhere, sapped by the spectre of a US war against Iraq, high oil prices and a relentless slide in global equity markets.
The University of Michigan's US consumer sentiment survey for October, released on Friday, plumbed a nine-year low, while South Korea, Asia's fourth-largest economy, said on Monday that consumer confidence tumbled to its weakest level since December.
"The world economy is going through a very difficult period. It is reasonable to expect it to improve over time, but that is looking like being a very slow process," Glenn Stevens, the deputy governor of Australia's central bank, said.
"In the interim the major economies will be vulnerable to further shock," Stevens told a business conference in Sydney.
Cult of fear
Lincoln Teo, director of Singapore's credit bureau, drew a parallel between the Bali blasts and a spate of apparently random sniper shootings in Washington, which have sown terror in the US capital.
"The last thing that anybody will want to do is to have a beer or sit at a sidewalk cafe and watch life go by," Teo said.
Consumer spending has been showing increasing vigour across Asia, but Teo said the attacks in Bali were bound to make people think twice before opening their wallets.
Under siege
"This bombing brings home the message that this region is definitely under threat. As a result we're trapped in a cult of fear. Fear cripples everything. It cripples creativity and your propensity to consume," Teo said.
Weakening consumer demand would be a headache for Asian policy makers at the best of times, but it would be especially troubling now because of concerns that export growth -- still the region's main economic driver -- is starting to flag.
Pradumna Rana, head of the Asian Development Bank's Regional Economic Monitoring Unit in Manila, said the bank was sticking to the last forecast it made in July of a moderate economic rebound, but he admitted the international environment had deteriorated.
"External risks and uncertainty have certainly increased since July and the risks are mainly on the downside," he said.
Underlining the risk, officials in Berlin at the weekend scaled back their growth forecast this year for Germany, Europe's biggest economy, to just 0.5 percent from 0.75 percent.
Fragile confidence
Apart from the impact of slowing global demand, some economists are worried about the longer-term fall-out on Asian exports of a recent 10-day closure of US West Coast ports.
Rob Subbaraman and Graham Parry, economists at Lehman Brothers in Tokyo, estimate the shipping disruptions will lop no more than 0.2 percentage points off Asia's fourth-quarter GDP.
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