7/15/2009 9:53 AM
ET
(RTTNews) -
United States Treasury Secretary Timothy Geithner spoke Wednesday in the Middle East, discussing the need to create balanced global growth in the wake of the lingering economic crisis.
During a visit to the United Arab Emirates, Geithner told reporters that it is essential that growth is more balanced, in order to create a more stable world order to stave off future crises.
"We do not just want to address the immediate cost of the financial crisis, but we want to rebuild a stronger foundation for a more balanced growth globally," he said. "We need to make sure that as we emerge from this crisis that we are not sowing the seeds for future crises."
"That is going to require looking for future sources of growth that are going to be sustainable, and that we create the foundation for a stable financial system," he added.
Tuesday, Geithner cautioned that while the global economy is on the road to recovery it will likely be a bumpy one, full of minor setbacks. Geithner said that the increase in public debt and a loss of household wealth will work against a smooth economic recovery.
"This crisis has been brutal in the extent and severity of damage to economies around the world," Geithner said in Jeddah, Saudi Arabia. "Given the extent of damage to financial systems, the loss of wealth, the necessary adjustments to a long period of excessive borrowing around the world, it seems realistic to expect a gradual recovery, with more than the usual ups and downs and temporary reversals."
In terms of the labor markets, Geithner stressed that employment situations will remain difficult until economies begin to grow again and employers gain confidence. In addition, the credit markets - while improved from the height of the credit crunch - will remain "unusually tight" for some time.
The United States is currently dealing with its largest deficit since World War II, currently with a $1.1 trillion deficit for the fiscal year beginning October 1 2008.
Geithner also pledged to support a strong dollar, recognizing the prominent role the currency plays in the economy.
"Given the dollar's role in the international financial system and the significant impact of the U.S. economy on global economic conditions, we fully recognize that the United States has a special responsibility to play," Geithner said.
"The policies of the United States are designed to lay the conditions for a strong dollar and more stability in the international monetary system," he added.
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