Failure to raise the U.S. debt ceiling could have harsh economic consequences worldwide, Angel Gurra, secretary general of the Organization for Economic Cooperation and Development (OECD), warned Thursday.
"This is serious,"the OECD chief told reporters on the sidelines of the annual International Monetary Fund (IMF) fall meetings."It's not just about the United States ... You would have an impact everywhere."
Problems began in recent weeks when the U.S. government saw its first partial shutdown in 17 years, and then a wrangling over the debt ceiling followed.
The date of Oct. 17 is the next crucial deadline -- the last day the U.S. Treasury Department estimates the federal government is certain to have enough money to pay its bills, unless the bitterly divided Congress agrees to raise the debt limit.
Gurra noted the debt ceiling crisis is occurring just as the U.S. economy was starting to get back on its feet.
"The American economy was showing such vibrancy, such muscle, such strength ... and just showing its power, and then comes this," he said, referring to recent growth in a number of U.S. economic metrics including the jobs market.
While the OECD said the probability of a U.S. failure to raise the debt ceiling is low, it would have disastrous impacts if it does occur, and could thrust many of the world's economies into recession.
The group said its calculations suggest the U.S. failure to raise the debt ceiling would push the OECD region back into recession next year, and that emerging economies would see a sharp slowdown.
A debt default would cause the U.S. to reduce its imports from the rest of the world, and economic confidence would take a sharp hit virtually everywhere, the OECD said.
Some other experts said that while U.S. Congress'game of brinksmanship may lead lawmakers to miss the deadline to pay interest on its loans, the U.S. is unlikely to actually default and blow off its debt responsibilities.
Still, the current stalemate in Congress has led to much uncertainty in the U.S., and a Gallup poll released Tuesday found Americans' economic confidence dropped more over the past week than in any week since the 2008 Lehman Brothers collapse that triggered off the global economic nosedive.
The issue is also a source of worry for IMF officials and is expected to be a main theme of this week's meetings.