U.S. Treasury Secretary Jacob J. Lew urged global leaders to step up measures to boost economic growth and reduce unemployment and reiterated he’s concerned demand in Europe is too weak.
“This is no time for complacency, and we must not succumb to accepting subpar growth and high unemployment rates,” Lew said in a statement during International Monetary Fund meetings in Washington today. Growth “has been the top priority for the United States and must continue to be at the top of the global economic agenda.”
Global finance ministers and central bankers are in Washington discussing ways to boost their economies. The IMF this week predicted world growth of 3.6 percent this year, compared with a January estimate of 3.7 percent. Next year, the expansion will accelerate to 3.9 percent, little changed from the prior forecast.
On the euro area, Lew said the U.S remains “concerned by inflation rates consistently below target and weak demand.”
“More needs to be done to support growth and guard against further disinflation in the euro area,” he said. “This will help reduce the burden of adjustment in the periphery and promote demand rebalancing in the euro area.”
The 18-country euro area will expand 1.2 percent this year, up from 1 percent forecast in January, according to IMF projections released this week.
Lew said he welcomes “progress” toward a European banking union even as additional steps are needed “to avoid a repeat of the fallout from the euro-area banking crises into sovereign borrowing markets.”
Lew also reiterated his view that China needs to accelerate changes to its economy.
“Rebalancing the Chinese economy will require further exchange-rate appreciation so that consumption, rather than investment, drives domestic demand,” he said. “It is critical that China demonstrate that they are committed to moving toward a market-determined exchange rate, and that progress continues on a steady basis. This is very important for preserving a level playing field for world trade.”
On the U.S., Lew said the recovery “continues to gain strength, while other countries continue to adjust and reform.”
“Yet while we are optimistic about the near-term U.S. outlook, we remain concerned that too many Americans are unemployed,” he said.
U.S. payrolls, excluding those at government agencies, rose by 192,000 workers in March after a 188,000 gain the previous month that was larger than first estimated, the Labor Department said last week. Private employment exceeded the pre-recession peak for the first time. The jobless rate held at 6.7 percent last month.
Lew, addressing the crisis in Ukraine, said the U.S. is encouraged by Ukrainian authorities’ “resolve” to take steps necessary to secure an IMF aid package. “It is critical that the international community -- multilateral development banks and bilaterals -- take immediate steps to also support the IMF program by providing financing support, given the sizeable financing needs.”
Ukraine will probably receive $7 billion in IMF financing this year to support the state budget and central bank reserves, Ukrainian Finance Minister Oleksandr Shlapak said.
The country is also seeking further funding from Group of Seven nations, Shlapak said an interview in Washington yesterday. The U.S. is planning a $1 billion loan guarantee to bolster the IMF package.
Lew also urged Japan to carry out policies to “ensure that overall fiscal consolidation is not too rapid, while pursuing long-term structural reform measures to increase trend growth and domestic demand.”
Volatility in emerging markets has receded, Lew said. Developing economies need “strong economic fundamentals, including flexible exchange rates,” he said.