Washington - US Treasury Secretary Timothy Geithner on Wednesday said it was important that debt-stricken European nations avoid moving too sharply with immediate budget cuts and tax hikes, since that could undermine growth and chances for reform.
“It’s very important to get that balance right between... growth and austerity,” Geithner told an event at the Brookings Institution. “The best way to do that is... with some gradually phased in medium-term plans for reform.”
“To try to do it all up front, the risk is... you’re undermining the prospects for some stability in growth, some recovery in growth, and you may end up undermining and setting back the cause of reform,” he said.
Emerging markets Geithner also said that the US is better positioned than most other rich countries to benefit from fast growth in the developing world in the years ahead.
“The world is actually still at the early stage of a very long period of pretty substantial rates of growth in the emerging world - the most populous parts of the world,” he said.
“And we are better positioned than most developed economies to take advantage of that.”