Global Imbalances Threaten Recovery

(CTV News)

Even as Canada’s economy roars back to life, policy makers are pointing to an enduring problem lurking in the background and menacing a lasting global recovery.
In a statement Tuesday accompanying its decision to raise interest rates, the Bank of Canada cautioned that “the required rebalancing of global growth has not yet materialized.” In other words, some countries still spend more than they should, while others save far too much.

It’s a message that Canadian officials are carrying to China this week, as Finance Minister Jim Flaherty and Trade Minister Peter Van Loan visit Shanghai ahead of a meeting of the Group of 20 senior finance officials in South Korea.

They’re urging China to allow greater flexibility in its currency, something they say will help it boost the purchasing power of its own citizens. It would also be a major step in remedying the lopsided arrangement of the global economy, where China and other export-driven economies rely on demand from U.S. consumers to fuel growth. Read more here.