U.S. Says Europe Biggest Headwind, G-20 Will Discuss

A U.S. Treasury Department official said the European crisis remains the strongest headwind to world economic growth and will be discussed at the Group of 20 nations meetings, along with President Barack Obama’s fiscal plan.

The official, who briefed reporters before the G-20 sessions on Nov. 4-5 in Mexico City, also said that Greece and its international creditors appear to be close to an agreement.

The G-20 meetings of finance ministers and central bankers will start two days before the U.S. presidential election. The U.S. delegation will be headed by Treasury Undersecretary for International Affairs Lael Brainard.

The Obama administration hopes that Congress will move quickly to act on the president’s deficit- and debt-reduction plan, the Treasury official said today in response to questions about the so-called fiscal cliff.

“Fiscal cliff” refers to the more than $600 billion of federal spending cuts and tax increases that will automatically take effect at the start of next year unless Congress acts.

Hitting the cliff would probably reverse U.S. economic growth and put the world’s largest economy back into recession, the nonpartisan Congressional Budget Office said on Aug. 22.

The Treasury official also said China has further to go in achieving a market-oriented exchange rate, while the nation’s recent slowdown shows that domestic consumption still has some distance to go in driving China’s growth.

The official briefed reporters on condition of not being further identified.

To contact the reporter on this story: Kasia Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Kevin Costelloe at kcostelloe@bloomberg.net

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