Europe, Japan not doing enough for domestic demand: US

26th June 2010, Comments 0 comments

US Treasury Secretary Timothy Geithner complained Saturday that governments in Europe and Japan are not doing enough to support global economic recovery through boosting domestic demand.

Speaking as world leaders gathered in Toronto for a summit of the G20 group of the world's leading economies, Geithner declared: "This summit must be fundamentally about growth."

And he expressed regret that Japan and some European governments had not made increased domestic consumption more of a priority.

"I don't think you've seen from these countries yet a set of policies that, again, will give everyone confidence that you're gonna see stronger domestic demand-led growth in those countries going forward," he said.

Geithner's determined emphasis on boosting growth will worry some European leaders, led by Germany's Chancellor Angela Merkel, who argue that members must also focus on slashing their public deficits.

Washington fears that immediate large-scale public spending cuts of the kind that Merkel and Britain's Prime Minister David Cameron have embarked upon could stifle demand and reverse the recovery.

"The G20 leaders come to Canada with a solid track record. The world economy is now coming out of the fires of the crisis," Geithner said.

"Because we acted together, the world economy is now growing again, trade is expanding, and we are repairing the financial damage.

"If growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis," he warned.

Germany is Europe's biggest exporter, but its citizens are determined savers and Merkel has been adamant that she must cut government spending to reduce her public deficit and restore stability to the eurozone.

Geithner made no direct swipe at Germany's program, but he warned Europe and Japan are "still excessively dependent on exports" -- suggesting that he would prefer Merkel to boost domestic demand rather than to cut spending.

© 2010 AFP

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