CAIRNS, Australia, Sept 21 (AFP): US Treasury Secretary Jack Lew on Sunday called on the eurozone to do more to strengthen demand and make the structural changes needed to kick-start a moribund economy that is hampering world growth.
Last week the OECD said the sickly eurozone recovery -- a combination of feeble growth, high unemployment and super-low inflation -- was acting as drag on the outlook for the global economy.
It cut by a third its 2014 growth forecast to 0.8 per cent, from the 1.2 per cent expansion it had projected in May for the 18-nation single currency bloc.
"The discussions over the weekend have shown a growing recognition that Europe is going to need to do more to get its economy to where it should be," Lew said in Cairns after a Group of 20 meeting of finance ministers.
"What is clear from the US experience is that the combination of taking action to boost demand in the short run and making structural changes for the long run is a important combination and it shouldn't be a choice between the two.
The Organisation for Economic Cooperation and Development said the eurozone's recovery from its debt crisis had run out of steam, with growth stagnating in the second quarter.
It also warned of the risk from increased tension over conflicts in Ukraine and the Middle East.
Lew, speaking at a press conference, pointed to unemployment in Europe at near record highs and inflation at "dangerously low levels".
The treasury secretary said the principle of both increasing demand and making structural reforms was "actually consistent with many of the ideas that are being discussed in Europe".
"The challenge in Europe is to get an agreement on how to bring those pieces together," he said.
"The concern I have is that if the efforts to boost demand are deferred for too long, there are risks that headwinds get stronger.
"And what I think Europe needs is more tailwinds in the economy. That's what boosting demand in the short run would do," he added.
"At the same time it is clear of the great need for structural reform in Europe. It is a question of finding the right balance."
Lew said that while there were "philosophical differences" with some European countries on how to drive growth, "I think the notion that there needs to be a balance between the two, there is a growing consensus".
Asked about Lew's remarks, European Commission vice president for economic and monetary affairs Jyrki Katainen said: "Everybody can see that our growth is too small.
