(MENAFN) International credit rating agency S&P Global issued a report Wednesday warning that the ongoing US government shutdown will modestly curb gross domestic product (GDP) growth while escalating economic uncertainty.

According to the report, each additional week the federal government remains closed could shave off 0.1 to 0.2 percentage points from economic growth.

"This figure accounts mainly for direct costs and hence is a conservative estimate relative to the decrease, including hard-to-estimate indirect costs," the agency said in its statement.

The analysis is grounded in past shutdown impacts, noting that GDP losses are often partially recovered once federal employees receive retroactive pay following the shutdown’s conclusion.

The report highlighted the political dynamics behind the shutdown, explaining that annual federal funding approval requires a simple majority in the House of Representatives and a 60-vote threshold in the Senate. Given the current congressional makeup, bipartisan negotiations are essential to resolve the impasse.

Referencing the 2013 shutdown during former President Barack Obama's second term, S&P Global recalled that the 13-day halt cut real GDP growth by 0.3 percentage points in the final quarter of that year, as per the Bureau of Economic Analysis.

"It's important to note that the government shutdown is unrelated to the federal debt ceiling. The US debt limit was increased by $5 trillion in the July budgetary legislation passed under reconciliation. As a result, the government won't run out of borrowing capacity during the current shutdown," the statement clarified.

While emphasizing that the shutdown typically exerts only a marginal effect on the broader economy, S&P Global cautioned that secondary consequences could intensify over time.

The report underscored that delays in releasing critical economic data due to the shutdown would amplify uncertainty surrounding the Federal Reserve's monetary policy decisions.

Highlighting the Fed’s data-driven stance, the statement added, "As conditions stand, we expect two more 25-basis-point rate cuts before the end of this year and another 50-basis-point easing in 2026."

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