As the United States combats a slowdown and Europe confronts a period of slower growth, economies on the Pacific Rim will need to do more to stimulate demand at home, US Treasury Secretary Timothy Geithner said on Thursday.
Stimulation of domestic demand growth by these economies, Geithner argued in Hawaii at the APEC Finance Ministers Meeting, is important so that they are less vulnerable to slowdowns, such as the situation in Europe, and so they can continue to contribute to global growth.
In his address to Finance Ministers of the 21-member Asia-Pacific Economic Cooperation (APEC) forum, Geithner said this process of rebalancing will be aided by exchange rate policies in China and other Asian economies that allow their currencies to adjust in response to market forces.
"China, in particular, must continue to allow its currency to strengthen and China has acknowledged the importance of faster exchange rate adjustment," he said,
adding that the ministers agreed to continue their work to advance global financial reform and build a level playing field in order to reduce the chance that risk-taking shifts to jurisdictions with lower standards.
APEC ministers also discussed practical, direct measures for boosting future growth in all global economies, focusing on the vital role of infrastructure investment in catalysing growth and employment creation, Geithner said.
To protect the poor and promote financial resilience, APEC economies have taken steps to expand the reach of safe and reliable financial services, he said.
While APEC economies are the most vulnerable to a global slowdown, they can also play the greatest role in contributing to the global recovery and establishing the foundations of strong, sustainable and balanced future growth, he said.
The APEC economies account for more than half of global GDP and the bulk of these economies are likely to grow significantly faster in coming years than the rest of the world, he said.
They also account for more than half of global current account surpluses and their rebalancing efforts are critical to the foundations of strong, sustainable global growth, he added.
Geithner said APEC economies are the destination for 60 per cent of US exports, a figure that is likely to continue increasing. US exports have increased by 15.9 per cent overall over the past year.
"Our exports are growing at a rate nearly four times faster than our overall economy, further underscoring the importance of the Pacific Rim to American jobs and global growth," Geithner said.
"As APEC economies grow and as they move to increase domestic demand, the importance of our relationships with them will only grow," he said.
Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region.
