Swan says G-20 sees global re­cov­ery as ‘frag­ile’

The Pak Banker - - Front Page -

SYDNEY

Aus­tralian Trea­surer Wayne Swan said most of his Group of 20 coun­ter­parts see the global re­cov­ery as “frag­ile” and urged Europe to press on with closer fi­nan­cial in­te­gra­tion and the U.S. to cut its bud­get deficit.

“It’s crit­i­cal that lead­ers of many ma­jor economies now get on with the nec­es­sary struc­tural re­forms needed to un­der­pin growth,” Swan said in his weekly eco­nomic state­ment re­leased on Sun­day. “From my ini­tial meet­ings, it’s clear most of my G-20 col­leagues view the global re­cov­ery as frag­ile.” The world econ­omy will grow 3.3 per­cent this year, the slow­est since the 2009 re­ces­sion, and 3.6 per­cent next year, the In­ter­na­tional Mone­tary Fund said Oct. 9. That com­pares with July pre­dic­tions of 3.5 per­cent in 2012 and 3.9 per­cent in 2013.

Swan said, even as the U.S. has recorded more pos­i­tive data in re­cent weeks, that na­tion’s re­cov­ery re­mains “shaky.” “The most press­ing is­sue for who­ever wins this week’s pres- iden­tial elec­tion will be work­ing with Congress to avert the fis­cal cliff,” Swan said, re­fer­ring to $607 bil­lion in fed­eral spend­ing cuts and tax in­creases sched­uled to take ef­fect in Jan­uary un­less the U.S. Congress acts.

Pres­i­dent Barack Obama and Mitt Rom­ney criss­crossed the U.S. on the fi­nal week­end of the cam­paign be­fore the Nov. 6 elec­tion as a closely watched poll in the swing state of Iowa showed the in­cum­bent ahead there. Obama is lead­ing the Repub­li­can chal­lenger 47 per­cent to 42 per­cent among likely Iowa vot­ers, the Des Moines Reg­is­ter’s Iowa Poll shows. “While avoid­ing the fis­cal cliff is crit­i­cal to sup­port­ing ac­tiv­ity in the months ahead, the U.S. will also need to out­line a strat­egy to get its bud­get back on a sus­tain­able foot­ing to sup­port eco­nomic growth over the longer term,” Swan said.

Swan said he will travel to Wash­ing­ton from the G-20 sum­mit in Mex­ico for meet­ings with U.S. Trea­sury Sec­re­tary Ti­mothy F. Gei­th­ner, Fed­eral Re­serve Chair­man Ben S. Ber­nanke, U.S. Con­gres­sional Bud­get Of­fice Di­rec­tor Dou­glas El­men­dorf and In­ter­na­tional Mone­tary Manag­ing Di­rec­tor Chris­tine La­garde. In Europe, Greek Prime Min­is­ter An­to­nis Sa­ma­ras’s bid to please lenders from the Euro­pean Union and IMF with a 13.5 bil­lion-euro aus­ter­ity pack­age and un­lock funds ran into re­newed ob­sta­cles last week. A law on state as­set sales scraped through par­lia­ment, rais­ing ques­tions whether the gov­ern­ment will be able to muster enough sup­port to pass the mea­sures.

Swan noted that about 18.5 mil­lion peo­ple in Europe are look­ing for work, more than Aus­tralia’s en­tire adult pop­u­la­tion. “Per­haps most trou­bling is the fact that youth un­em­ploy­ment is around 50 per­cent in coun­tries like Greece and Spain,” he said. Europe’s un­em­ploy­ment rate is 11.6 per­cent, com­pared with 5.4 per­cent in Aus­tralia. Back home, Swan is bid­ding for a A$ 44 bil­lion ($ 45 bil­lion) swing to bring the na­tion’s bud­get back to a sur­plus in time for an elec­tion due by late next year. —

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