G-20 Told Not to Count on U.S. Buyers

by
June 5, 2010
By CHOE SANG-HUN, The New York Times

BUSAN, South Korea — Treasury Secretary Timothy Geithner of the United States told his counterparts at a Group of 20 conference on Saturday that they should not rely on spending by American consumers for their economic recovery, and he urged Japan, Germany and China to boost domestic demand.

“We discussed how the ongoing shift toward higher saving in the United States needs to be complemented by stronger domestic demand growth in Japan and in the European surplus countries, and by sustained growth in private demand, together with a more flexible exchange rate policy in China,” Mr. Geithner said.

He spoke at the end of a two-day conference of finance ministers and central bankers from the world’s 20 leading economies. The officials gathered in this port city in southern South Korea to discuss ways of shoring up a fragile global recovery in the face of the euro zone debt crisis.

Their discussions gravitated toward how to strike a balance between two apparently contradictory goals: continuing to stimulate recovery while also reining in massive deficits in some member nations.

They also haggled over the thorny issue of reforming supervision of banks and other financial institutions to stop the world from plunging into a re-run of the 2008-2009 recession.

“We agreed that the withdrawal of fiscal and monetary stimulus must proceed in step with the strengthening of the private sector recovery in our economies,” Mr. Geithner told reporters.

“Fiscal consolidation should be ‘growth-friendly,’ ” he said, adding that the “pace and composition of adjustment” should vary across countries.

In a joint statement, the finance ministers and central bank governors mentioned the same agreement, after reaching a compromise over budget cuts needed to calm global financial markets rattled by a debt crisis in Europe. They said, without mentioning Europe by name, that the “recent volatility in financial markets reminds us that significant challenges remain and underscores the importance of international cooperation.”

To read more, visit: http://www.nytimes.com/2010/06/06/world/asia/06summit.html

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