"A surge in terrorism, Islamist or otherwise, is by itself unlikely to affect the sovereign ratings of Western European economies. That said, terrorism could gradually and indirectly hamper economic growth prospects in the region and have potential fiscal consequences for governments," Moritz Kraemer, S&P's sovereign global chief risk officer, said in a report on Thursday.
Attacks orchestrated by the so-called Islamic State have surged recently; in the past month, the militant group is believed to be responsible for attacks in Ankara in Turkey, Egypt's Sinai Peninsula, Beirut in Lebanon and most lately, Paris.
France's national assembly approved a bill to extend the country's state of emergency for three months on Thursday, which gives the state extra powers to confine and search people. French Prime Minister Manuel Valls has warned there is a risk of further attacks, including with chemical weapons, according to media reports.
Kraemer said that the possibility of repeated attacks could depress consumer and investor confidence in Western Europe.
"With fears of further terrorist attacks on the rise, tourism could take a hit not only in Paris but possibly more broadly. Aviation and certain service industries may drag on economic growth as consumers retreat from what they consider exposed and crowded locations of commerce and leisure activities," he said in the report.
"The weak recovery in Europe could become weaker still and have negative implications for fiscal adjustment, employment, and social cohesion."