The global economy is relying too heavily on Asia to make up for stagnant growth in the U.S. and Europe, said Australian Treasurer Wayne Swan, who urged international policy makers to do more to bolster expansion.
“It is time for the other players to get off the benches and start to pull their weight on global economic growth again,” Swan said in remarks to the International Monetary and Financial Committee in Tokyo yesterday, according to a transcript from his office. “Asia alone can’t carry the global economy.”
Europe’s fiscal crisis, now in its third year, is constraining growth in Asian exporting nations from China to South Korea and Taiwan. The Washington-based International Monetary Fund said Oct. 9 that failure to remedy the region’s debt problems was contributing to an “alarmingly high” risk of a steeper slowdown in the world economy, already on course to expand this year by the least since the 2009 recession.
While policy makers need to contain risks, they must dedicate themselves to lifting global growth, Swan said.
“Putting fiscal positions on a sustainable footing needs to be done hand in hand with supporting growth -- this does not need to be one or the other,” he said.
Swan also called on the U.S. to act to avoid “falling off the fiscal cliff,” referring to a deadlock in Congress to avert hundreds of billions of dollars in tax increases and spending cuts. He said failure to do so would “no doubt” push the world’s largest economy back into recession.
Swan reiterated Australia’s plan to return its budget to surplus this fiscal year. Lower prices for iron ore and coking coal have eroded the nation’s terms of trade -- a measure of windfall gains from exports that reached a record high last year -- making it more difficult for the government to achieve its objective.
“The weaker global outlook and recent decline in commodity prices will also hit our budget revenues significantly,” Swan said in an e-mailed weekly note today. “These headwinds mean we’ll have to find some substantial savings to return the budget to surplus in 2012-13, but we remain committed to doing just that.”