Countries must not rely on the American consumer, says Snow

US treasury secretary John Snow warned on Tuesday it was unhealthy for the global economy if countries depend on American consumers for grow...

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US treasury secretary John Snow warned on Tuesday it was unhealthy for the global economy if countries depend on American consumers for growth, saying other nations needed to foster home-grown expansion.

As he prepared to head back to Washington after a 10-day swing through the Middle East and a weekend meeting of Group of Seven Finance ministers in Dubai, Snow said too many countries were relying on export-led growth.

‘‘While export growth can serve a useful purpose, you can’t have a successful world economy if everybody relies on the export sector,’’ he said. ‘‘Then, you build in imbalances.’’ ‘‘So there’s increasing acceptance that particularly the major economies of the world need to focus on their demand-led growth, take steps to put in place reform policies that allow their domestic economies to perform well.’’

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Snow claimed there was growing acceptance among the G7—the United States, Britain, Canada, France, Germany, Italy and Japan—about the need to get growth on a faster track. He said a G7 statement issued on Saturday saying the ministers agreed on an ‘agenda for growth’ that committed each country to take all steps necessary to boost economic activity was a solid achievement.

‘‘I’m really pleased that the communique hit the nail on the head on that one and recognised that, clearly, the United States can’t be the only real engine of growth for the world,’’ Snow said. ‘‘That’s destabilising for the world economy.’’ The United States has been posting huge trade and current account deficits, partly because countries like Japan and China target America’s booming consumer markets for their products.

One of Snow’s goals has been to persuade China to let its yuan currency float more freely so its products are priced in response to market forces.

Japan also has been in US sights over its repeated interventions in currency markets aimed at keeping its yen from appreciating too rapidly and sapping exports. Reuters