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U.S. Treasury Secretary Timothy Geithner says the global economy is moving towards recovery, but cautioned other countries that they cannot rely on U.S. domestic consumer demand to be the engine of world economic growth, as it has been in the past. Geithner spoke to the Senate Foreign Relations Committee on the role of the Group of 20 nations.
Treasury Secretary Geithner said that at the start of this year, the world faced the very real possibility of a great depression and financial collapse. But he said the Obama administration had worked closely with its G-20 partners to adopt a forceful response, which he says has put out the fire. Geithner said the world is now moving to a period of recovery, but called for more balanced global demand to give the world economy a more solid foundation.
"As the United States saves more as a country, future growth will depend more on domestic growth outside of the United States," said Timothy Geithner.
Faced with soaring unemployment rates and economic uncertainty, U.S. consumers have reduced their traditional shopping and spending habits, and have dramatically increased their personal savings rates. Geithner said as the economy gets stronger, the Obama administration will also begin to reduce the federal government's huge budget deficits.
In calling on other countries to do their part, the Treasury Secretary singled out China, where President Obama has been holding talks this week.
"China has to move to take steps to move away from excessive exports, to domestic-consumption led growth," said Geithner.
Geithner emphasized that this view is widely held within the G-20. He also told the committee that the International Monetary Fund would need to be at the center in helping countries adopt economic policies that encourage more balanced global economic growth.
