The global economy is “sluggish and fragile,” requiring both advanced and developing nations to focus on reinvigorating growth in domestic demand, a U.S. Treasury official said.
“Global recovery has been held back by a lack of demand growth in many of the major advanced economies, and by resistance in many emerging economies to moving more quickly toward the currency flexibility needed for a durable rebalancing,” Lael Brainard, the Treasury’s undersecretary for international affairs, said in the text of a speech in Washington.
“As a result, it runs the risk of being overly dependent on the recovery in the United States.”
The euro-area economy shrank more than economists forecast in the three months through March, a report showed earlier today, extending a recession to a record sixth quarter and increasing pressure on the currency bloc’s leaders to spur growth.
Gross domestic product in the 17-nation eurozone fell 0.2 percent after a 0.6 percent decline in the previous quarter, the European Union’s statistics office in Luxembourg said.
Brainard said euro-area officials “deserve enormous credit for the difficult steps they have taken to restore financial stability and address tail risk.”
“Now the focus needs to shift to boosting demand and employment to avoid lasting damage to the economic potential of a critical engine of the world economy and avoid the risk of protracted stagnation, with heavy social costs,” she said.
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