Treasury Secretary Timothy Geithner said Tuesday the global economy is moving toward a recovery but countries can’t rely on U.S. consumers to serve as the engine of worldwide growth.
In testimony prepared for the Senate Foreign Relations Committee, Geithner said that significant cooperation among the world’s 20 major economies had helped countries to “put out the financial fire” and restart economic growth.
“To establish a more global foundation for growth and avert future crises of this nature, we must rebalance global demand,” Geithner said.
Countries with large trade surpluses such as China will have to foster policies to support domestic growth, while countries with large trade and budget deficits will need to boost savings, he said.
The personal savings rate already has risen significantly in the U.S. during the current crisis and as the economy achieves sustainable growth, the Obama administration will begin working to reduce the federal government’s soaring budget deficits, Geithner said.
“Emerging markets and economies with large and sustained surpluses will need to shift their growth towards domestic demand and reduce their reliance on exports,” he said. “Governments around the world will need to accept this basic reality or we will all face slower growth.”
Copyright 2009 The Associated Press.