US Treasury Secretary Jacob Lew says governments in Europe, Japan and China are failing to deliver needed economic support.
The US has expressed frustration that a number of countries aren’t doing enough to boost economic growth as finance ministers from the world’s largest economies express determination to prevent a slide into another global recession.
Treasury Secretary Jacob Lew said governments in Europe, Japan and China were failing to deliver needed support.
“European leaders should focus on recalibrating policies to address persistent demand weakness,” Lew said in comments prepared for a session of the policy-setting committee of the International Monetary Fund, which was scheduled to conclude its discussions on Saturday.
The policy-setting committee of the World Bank also was to meet. Both groups were expected to again address the Ebola crisis in West Africa.
Lew said Japan’s outlook was uncertain, with growth projected to remain weak this year and next. He said Japanese officials needed to carefully calibrate budget reductions and “move decisively to implement requisite growth-boosting structural reforms.”
He said China’s economy remained strong but risks had risen and the country needed to put more emphasis on consumption-led growth.
Lew did not mention Germany by name, but it was clear that his remarks on Europe focused on that nation’s reluctance to do more to stimulate growth. “Countries with external surpluses and fiscal flexibility” needed to do more to boost growth, he said. Germany, Europe’s largest economy, ran a large trade surplus last year.
Even some of Germany’s European partners have said countries in the 18-nation euro zone should shift away from the deficit-cutting policies Germany has championed and boost investment spending to avoid being stuck in Japanese- style stagnation.
It was against that background that G-20 finance ministers and central bank presidents met for two days of talks that ended Friday in advance of the IMF-World Bank meetings.
After those discussions, the ministers unveiled plans for a global initiative to build roads, ports, railways and other infrastructure projects to help boost world growth by $US2 trillion ($A2.16 trillion) over the next five years and create millions of jobs.
The G-20 was being led this year by Australia, which was scheduled to host a leader’s summit next month in Brisbane. Treasurer Joe Hockey, who chaired the finance discussions, told reporters that the plan the G-20 group developed involved more than 900 individual initiatives with the potential to lift growth by 1.8 per cent over the next five years. He said details would be disclosed at the leaders’ summit.
While developing the five-year plan for infrastructure projects, the G-20 financial officials were less successful in their efforts to deal with immediate threats from slowdowns in Europe, Latin America and China. The group did not issue a communique, but individual ministers said economic problems were discussed in the G-20 sessions.
“We as a group do not want to settle for mediocre growth,” Canadian Finance Minister Joe Oliver told reporters. “We don’t think we have to.”