Business

US Treasury Secretary Jack Lew calls for demand boost

Shoppers in Berlin
Image caption Falling imports suggest a slowdown in demand from German consumers

The US Treasury Secretary has urged countries with the "capacity" to do more to boost economic growth through consumer demand, in an apparent reference to Germany.

Jack Lew was speaking after talks with German finance minister Wolfgang Schaeuble in Berlin.

Germany is Europe's largest economy and is seen as vital to its recovery.

But statistics released on Tuesday suggested its economy is weakening, with both imports and exports down.

Mr Lew said the continued economic problems in Europe were a concern for the US.

"As we continue to address many of our long-term challenges, our economy's strength remains sensitive to events beyond our shores. We have an immense stake in a prosperous Europe," he told a press conference.

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Media captionUS Treasury Secretary Jack Lew: "We have an immense stake in a prosperous Europe"

In an apparent reference to Germany, he said consumer demand must be the driver of growth. He said policies that encouraged this in "countries that have the capacity" would be "helpful".

Austerity concerns

But German official statistics showed that exports fell by 1.5% in February while imports dropped by nearly 4%, suggesting a worrying weakness in German demand at home. The declines were greater than had been expected.

The export figures reflect the continuing weakness in the rest of Europe - where Germany sends about 40% of its exports.

Germany's non-eurozone exports actually grew in February.

The European Central Bank has forecast that the eurozone will remain in recession in 2013.

By contrast, Germany is expected to see modest growth, despite contracting by 0.6% in the last three months of 2012.

But Mr Lew's comments reflect persistent concern among some policy makers that Europe's austerity measures are preventing a faster economic recovery.

Germany has been a champion of austerity, particularly in countries such as Greece where austerity measures have been a condition of EU-sponsored bailout packages.

The US has focused on economic stimulus measures to lift it out of recession.

At Tuesday's press conference, German finance minister Wolfgang Schaeuble insisted that German policies were no obstacle for growth, arguing that reordering government finances was necessary for long-term prosperity.

He refused to be drawn on whether the US should move to cut its own budget deficit faster, saying he had "trust in the American government".

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