Hit from US shutdown limited

GLOOMY NEWS: President Barack Obama announcing the government shutdown at the White House on Monday. He accused Republicans in the House of Representatives of manufacturing a crisis that would hurt the US economy and citizens.


    Oct 02, 2013

    Hit from US shutdown limited

    THE global economy will probably withstand the United States government's first partial shutdown in 17 years, even as financial-market volatility rises in coming days, analysts and policymakers say.

    A one-week shutdown of some government services should have a less than 0.1 per cent impact on US gross domestic product, said Mr Tomo Kinoshita, chief economist at Nomura Holdings in Tokyo.

    Halting non-essential government services won't have much effect on imports from Asian economies, said Mr Richard Jerram, chief economist at Bank of Singapore.

    South Korea Finance Ministry director-general Choi Hee Nam said: "Investors will likely become more risk averse due to the shutdown." Any impact on the global economy will be short-lived, he added.

    Beyond the impact on growth, confidence in US policymakers' ability to steer the world's largest economy may be at stake.

    "Countries in the region cannot help but be dismayed by the political paralysis that has gripped Washington in the last few years," said Dr Evan Resnick, an assistant professor at the S. Rajaratnam School of International Studies. "It can't exactly fill friends and partners of the United States with great confidence to see the US incapable of actually passing a budget resolution."

    From New York's Liberty Island to Alaska's Denali National Park, the US government closed its doors as a bitter budget fight idled hundreds of thousands of federal workers and halted all but the most critical government services.

    For many employees of the federal government, the shutdown that began yesterday meant no more pay cheques as they were forced onto unpaid furloughs. For those still working, it meant delays in getting paid.

    Park ranger and father-to-be Darquez Smith said he already lives pay cheque-to-pay cheque while putting himself through college.

    "I've got a lot on my plate right now - tuition, my daughter, bills," said Mr Smith, 23, a ranger at Dayton Aviation Heritage National Historical Park in Ohio. "I'm just confused and waiting, just like everyone else."

    The impact of the shutdown was mixed - immediate and far-reaching for some, annoying but minimal for others.

    In Colorado, where flooding killed eight people last month, emergency funds to help rebuild homes and businesses continued to flow - but federal worker furloughs were expected to slow it down.

    National Guard soldiers rebuilding washed-out roads would apparently be paid on time - along with the rest of the country's active-duty military personnel - under a Bill passed hours before the shutdown. Existing Social Security and Medicare benefits, veterans' services and mail delivery were also unaffected.

    Other agencies were harder hit - nearly 3,000 Federal Aviation Administration safety inspectors were furloughed, along with most of the National Transportation Safety Board's employees, including accident investigators who respond to air crashes, train collisions, pipeline explosions and other accidents.

    Almost all of the National Aeronautics and Space Administration shut down - except for Mission Control in Houston.