Deadly attacks like last weekend's bomb blasts in Bali are akin to a "terror tax" on a global economy that is already facing a raft of risks, the International Monetary Fund (IMF) said yesterday.

Kenneth Rogoff, chief economist at the Washington-based IMF, said the bombings on the Indonesian island clearly dealt a blow to Asia's economy but it was highly speculative at best to judge how serious it would be.

"It's plausible that the economic effects on growth next year in the region will be limited, but that outcome is of course sensitive to how the security situation evolves, how policy responds and above all what the effects are on business and consumer confidence, domestically and in the rest of the world," Rogoff told a news conference.

But by raising costs for insurance, security and protection, Rogoff said attacks like those in Bali and those on the United States on September 11, 2001, at the very least blunted the benefits of positive trends in productivity and technology.

"One can think of there being a terror tax on the global economy," Rogoff said.

As with the attacks on the United States and the earthquake that devastated the Japanese city of Kobe in 1995, he said the direct economic consequences of the Bali blasts, which killed more than 180 people, could be fairly narrow and short-lived.

Indonesia had a broad economic base and had made notable progress on a number of policy fronts recently. But all would depend on the secondary impact on confidence.

Rogoff said he was cautiously optimistic about the world economy but placed the emphasis on caution rather than optimism.

In the United States, Rogoff said investors' extreme reluctance to take risks meant a further decline on Wall Street could not be excluded, even though price-earnings ratios were now in line with the average of the past 15 years.

Domestic demand in the euro zone was growing much less than gross domestic product, underscoring the need for sweeping labour market and other structural reforms to complement the European Central Bank's appropriate bias toward easier monetary policy.