(MENAFN - AFP) The ECB, France and Germany warned Wednesday that the US government shutdown and debt ceiling showdown could have repercussions around the world and in particular on the recovering eurozone economy.
The US shutdown "is a risk if it is protracted... it would be a risk not only for the US, but also the world economy," European Central Bank chief Mario Draghi said Wednesday.
"But we don't have that impression at the moment," he added.
In Washington, Republicans and Democrats -- already gridlocked over a budget bill -- have just over two weeks to strike a separate deal on raising the country's debt ceiling and avoiding a painful default.
A day after the US government shut down for the first time for 17 years, lawmakers remain at loggerheads over the budget, with Democrats refusing to give in to Republican demands for cuts in President Barack Obama's flagship health law.
Investors for now seem unruffled by the crisis, which has seen about 800,000 federal workers sent home and several agencies closed or on skeleton staffing, with markets not suffering huge selloffs.
"The shutdown so far has been fairly benign. The effects on the markets have been relatively low," said Laura Kodres, assistant director of the IMF's Monetary and Capital Markets Department.
But in Paris, Finance Minister Pierre Moscovici told a cabinet meeting that the US budget blockage could slow down recovery in France, the French government spokeswoman said.
"We are waiting for more precise data, but it would seem that every day of blockage is a financial loss for the US and by consequence on its partners," the spokeswoman said.
In Germany, government spokesman Steffen Seibert told reporters: "The German government is following the developments and events in the United States very closely and we regret that there has not yet been a resolution of the conflict over the US budget.
"We hope that there will be progress soon that will allow the conflict to end."
An economy ministry spokeswoman said she was as yet unaware of any German companies reporting cancelled US contracts due to the shutdown.
"Our experts say that if the affected time period of the spending freeze remains short and there is an agreement within two weeks then the economic impact in the United States but also abroad should not be significant."
The eurozone finally exited an 18-month recession in the second quarter of this year, but the recovery has struggled to gain momentum.
For now, analysts generally believe that the economic impact of a short shutdown would be small.
Oxford Economic estimated that each week of shutdown would shave 0.13 percent off the annualised growth rate in the current quarter. The US economy grew by an annual rate of 2.5 percent in the second quarter.
If the shutdown dragged on it would also likely begin to have a wider impact by eroding confidence among consumers and markets.
The IMF's Kodres warned that the uncertainty created by the political impasse could lead to tighter credit conditions in the world's largest economy.
"Any time we have an increase in uncertainty, that can have an effect on demand and potentially the supply of credit," she said during a news conference in Washington to unveil a new IMF report on global financial stability.
Households and businesses would likely rein in their use of credit because "it's very unpredictable to determine what will happen next," she said.
But the failure of Congress to increase the debt ceiling would be more damaging, analysts believe.
Fitch Ratings agency said if the debt limit is not raised the US Treasury "would be forced to dramatically cut back on current spending" with dire implications for the economic recovery.
It warned that "the full faith and credit of the US would be undermined..."