CAIRNS, Australia (AFP) – US Treasury Secretary Jacob Lew on Friday urged greater efforts to spur global growth as the head of the World Bank bemoaned a disappointing year and warned of downside risks ahead.
Lew called for more focus on investment and infrastructure to help create jobs in comments ahead of this weekend’s meeting of G20 finance ministers and central bankers in the northern Australian city of Cairns.
“The US continues to be a source of strength in the global economy,” he said, pointing to the US unemployment rate at a six-year low with 10 million jobs created by the private sector over the past 54 months.
“Overall, the global economy continues to under-perform. This is particularly true in the euro area and Japan, while a number of emerging market economies are also slowing.
“More work is needed to achieve faster and more balanced growth, to boost demand, especially in surplus countries and to promote employment,” he added.
“Part of this growth agenda is a focus on investment and infrastructure. We see investment, both public and private, as a key to boosting growth.”
A focus for the Cairns meeting will be tangible progress on an ambitious goal to raise the total GDP of the grouping’s countries by two per cent over the next five years – a target they set in Sydney earlier this year.
To meet the goal they pledged to work on reforms to accelerate infrastructure investment, lift employment and enhance trade, but a sickly eurozone recovery and weakening emerging economies threaten to hamper their efforts.
Tensions in Ukraine and the Middle East have spooked European economies, while stagnation and deflation risks in Europe and Japan and the US moving to normalise its monetary policy have added to concerns. Despite this, Australian Treasurer Joe Hockey, who will chair the Cairns meeting, said more than 900 submissions had been made by participating countries to meet the growth target.
“I think it is hugely important the contribution that countries have made, and infrastructure is a key part of that agenda,” Hockey said.
“Greater involvement of the private sector in delivering infrastructure is a hugely significant issue for G20 countries.”
World Bank President Jim Yong Kim welcomed the G20’s focus on driving growth but warned of risks ahead.
“It’s another disappointing year. At one point our growth projections were as high as 3.2 per cent globally and now they are around 2.7 per cent,” he told a forum in Sydney.
“And in that context we are very grateful to the Australian leaders for bringing the focus to growth.”
Kim cautioned that while there were encouraging signs from some parts of the world economy, plenty of concerns remained.
“The biggest risk to economic growth, there are several, there are lots of downside risks,” he told reporters. “Especially developing countries are very concerned about the removal of the unconventional monetary policy of the United States. And that looks like that is going to start happening in the middle of next year.
“What we are saying is that, especially for developing countries, if they continue with structural reform they will be able to prepare themselves for the eventual unwinding of the unconventional monetary policies.”