Americans will have to save more in the future, transforming the global economy, and Europeans and Japanese must work to boost domestic demand, U.S. Treasury Secretary Timothy Geithner was quoted as saying on Wednesday.
Everyone is going to have to come to terms with the fact that we are going to save more in the United States, Geithner said in an interview with German weekly Die Zeit, conducted on Sunday in Istanbul, and due to appear on Oct. 8.
If the U.S. starts saving more, that changes the whole world's economic reality, he said, according to the German text of the interview.
Geithner said China was already doing a lot to consider how to put growth on a more sustainable path.
In China, the government is at the forefront of thinking about new ways to reduce the dependence of the economy on export and investments, he said.
But it is not just about the U.S. and China. Europe and Japan make up 40 percent of the global economy.
Geithner said the U.S. could not force Europe to boost domestic demand to adapt to the new economic reality, but he saw it as the only viable strategy to guarantee lasting growth.
They have to decide themselves how to adapt. I am not aware of any other strategy that promises success.
He also said that the recovery was in a very early phase, and there were many risks ahead.
If you look at past crises, politicians mostly made the mistake of tightening the purse strings too early, he said.
The private sector needs to start growing on its own for a sustainable recovery to take place.