The US and world economies are on a path toward sustainable recovery, US Treasury Undersecretary John Taylor said on Friday, adding he hoped high energy prices will encourage greater supply to world markets.
"There is a big improvement in the (global) economy and it is sustainable," he told a CNBC Television financial summit.
Global growth forecasts of about 4.5 percent for 2004 and 2005 were the strongest since the late 1970s, driven in part by a resurgence in the United States and Japan, the world's two largest economies, Taylor said. "The reality is that things are very good, as good as they have been in 30 years," he added.
Taylor said a recovery in US employment, along with strong productivity growth and tax cuts, were boosting US income per capita and allowing wages to rise without the threat of the economy being tripped up by inflation.
"Things seem to have turned around" in Japan now deflation has bottomed out and the country is moving ahead with banking reforms to deal with bad loans left over from the 1990s.
"They are about half-way there to getting their non-performing loans to a reasonable level," he said.
Economic reforms in Russia and China also bode well for the global economic picture, Taylor said.
Taylor, who returned this week from Asian bank meetings in Tokyo, Beijing and Korea, will attend a meeting of finance ministers from six of the Group of Seven industrialised nations this weekend in New York.
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