(IPS) analysis - Even before Tuesday's terror attacks sent shockwaves through world financial markets and disrupted global commerce, warning signs were everywhere that international recession was imminent. Then came the suicide strikes.

US financial markets remained closed while overseas bourses teetered and slid before regaining some calm Wednesday and Thursday. But by the end of trading Tuesday, the dollar had taken a beating while gold - widely dismissed as an anachronism that would never regain its status as a safe haven in times of crisis - had surged by as much as 16 dollars, to around 289 dollars per ounce.

This could presage diminished investor confidence in the United States. Foreigners invest more than 500 billion dollars in US stocks and bonds every year.

''The terrorist attacks are likely to worsen the US economy in the short term, aggravating the recession that was in the offing in any event,'' said Sidney Weintraub, a political economist at the Centre for Strategic and International Studies (CSIS) in Washington. ''If the administration shows political decisiveness, and if there are no further major terrorist attacks, the economy should recover in the medium term, say, by the second quarter of 2002.''

Even before Tuesday's fateful events, a number of factors stoked fears of further economic slowdown worldwide.

First, all three major economies - the United States, Europe, and Japan - were in varying degrees of trouble. At most other times, at least one of these economies has had the strength to offset weakness in the others.

Second, leading emerging markets were unstable. Argentina, with a commanding 22 percent share of total emerging market investment, was circling the capital markets drain and threatening to pull down its neighbours as well as European and other trade and investment partners. Asia's recovery from the 1997-98 financial crisis remained fragile and China's banks, stock market, and manufacturers had begun to show signs of distress.

Consumer confidence

Third, the eight-trillion-dollar US economy - the world's largest and the engine not only of global investment but also trade - appeared to be hanging by a single thread: consumer confidence. The University of Michigan reported yesterday, however, that consumer's optimism in the economy had already slipped further than anticipated between August and September 10 - the day before the terror attacks.

Companies have been slashing their investments and laying off their workers. Although US unemployment remains near post-World War II lows, at about five percent, it is rising.

Workers in the 20-24 and 35-44 age groups - the biggest spenders - have been hit hardest. From January to June, according to official figures, the US economy lost 336,000 workers in their early twenties and exchanged them for 227,000 workers aged 55 to 64. Sales of electronics and clothing - major exports for the struggling economies of Asia and other developing regions - have suffered as a result.

The attacks are unlikely to do consumers' psyche any good. ''A bunker mentality could quickly develop, inducing businesses to further postpone investment and scaring consumers away from shopping malls and into canceling vacations,'' said Mark Zandi, chief economist at Economy.com

Within hours of the attacks, there was a run on petrol. Pumps in numerous US states began gouging prices as consumers jostled - in some cases, fought - for position in queues of vehicles.

Domestic and international commercial air traffic was grounded and security was beefed up at air, marine, and rail terminals. The borders with Canada and Mexico were sealed, cutting off key overland arteries. As restrictions are eased, they will be replaced with more cumbersome security arrangements than existed before. The likely consequence is costly delays and other losses as cargo backs up.

''The inevitable calls for fortifying the Canada-US border are based on a dangerous myth that such measures can work alongside the high-volume trade we share in goods and people,'' said Christopher Sands, Canada project director at CSIS. ''In the short run, increased border security will force companies to adjust their just-in-time delivery schedules.''

Different equation

US leaders responded to Tuesday's attacks with talk of war. Washington's entry into World War II fueled domestic production and generated economic recovery. But the equation now is very different: markets are more intertwined than they were in the 1940s and so much consumption now is tied to international commerce.

Although isolationism may appear the natural consequence of attacks perceived as coming from abroad, supporters of free trade will seize the opportunity to push Congress finally to grant the administration trade promotion authority to seal deals with other countries.

''Giving the president trade negotiating authority can lead to new growth opportunities for US exports and, of course, that means jobs,'' said CSIS international business expert Sherman Katz.

Meanwhile, the transport of goods appears likely to become more expensive at a time when most regions can ill afford the volume they already import, let alone the additional consumption needed to revive production and employment.

Within minutes of television pictures of Tuesday's suicide attacks reaching traders' desks, oil prices began to rise sharply. Many analysts say they believe tension in the Middle East will inevitably escalate, raising the spectre of a short-term energy crisis.

The Organisation of Petroleum Exporting Countries (OPEC) has said it would ensure that the world economy is not clobbered by oil shortages - a welcome relief to Japan and other countries most heavily dependent on imported oil.

Because many of those economies - including Japan - also lean heavily on the United States as a market for their goods, however, the prospect of collapsed consumer confidence presents an equally disturbing likelihood: job losses in export-oriented industries.

Also contributing to the chances of increased transport costs, insurers in London reportedly have hiked the cost of covering cargo and ships servicing ports in Iraq, Israel, and Lebanon against war damage. This is because of the perceived higher risk of US retaliatory strikes against targets in the region. Speculation is rife about the location of targets, the timing of strikes, other countries' involvement in them, and the places likely to be targeted in an eventual backlash to the U.S. retaliation.

Insurers also may increase shipping premiums to offset losses from the downing of four airliners and the destruction of prime real estate Tuesday. They did just this after suffering losses when rebels hit the international airport in Colombo, Sri Lanka, in July and destroyed half the national airline's fleet of planes.