The ongoing Shutdown of United States Federal Government is bound to have a deep impact on the global economy. A White House estimate shows that one week of Shutdown would result in loss of $10 Billion to US Economy, which is likely to trickle down to the economies of other countries who have ties with US.
US President Barack Obama has warned that the Shutdown risks destabilizing the world economy. Already, Global stock markets have started falling and the dollar dropped against major currencies on Monday, amid fears of shutdown.
The most visible impact would be on the American Stock Markets. If the Shutdown continues for long, Foreign investors may not feel confident buying U.S. bonds.
On Monday, the Dow Jones industrial average .DJI closed down 128.57 points, or 0.84 percent, at 15,129.67. The Standard & Poor’s 500 Index .SPX fell 10.20 points, or 0.60 percent, at 1,681.55. The Nasdaq Composite Index .IXIC slipped 10.12 points, or 0.27 percent, at 3,771.48.
During the shutdown period, the U.S. consular operations overseas will remain operational as long as there are sufficient funds to support them, according to the State Department
The shutdown would however disappoint Foreign tourists visiting United States if they had planned trekking through the Grand Canyon in Arizona or the National Zoo in Washington. The rangers who run these sites are considered “non-essential†federal employees, so the national parks will be closed.
On the long run, this may hurt the economies of countries like India, China, which have significant market in United States. Goldman Sachs estimates that a three-week shutdown could shave as much as 0.9% from US GDP this quarter.
A BBC Report cites George Mason University professor George Fuller, who says “If it’s a one day event, it’s like a snow day, if its three days it’s a blizzard – but if it’s more than that, it’s a big deal”.