U.S. crisis shouldn't slow G20 growth plan: Canada

Tue Oct 8, 2013 3:45pm EDT
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By Louise Egan

OTTAWA (Reuters) - The U.S. gridlock over government finances will dominate a meeting of G20 finance officials this week but should not slow down the group's work on an action plan to bolster long-term growth, a senior Canadian financial official said on Tuesday.

The official, who briefed reporters on condition of anonymity, said focusing on the short-term crisis in the United States was the responsible thing to do because increased uncertainty could throw a wrench in the efforts by the Group of 20 leading economies to engineer stronger growth. He said the G20 might have some influence on U.S. officials through peer pressure and discussion.

But he said the group should not lose sight of its ultimate goal of figuring out how to improve on a global recovery that has so far been unsatisfactory.

So far the U.S. government shutdown has had little effect on the Canadian economy. Exporters, who rely heavily on the U.S. market, say they have enough inventory to last a couple of weeks without problem.

But a prolonged shutdown and uncertainty over raising the U.S. debt ceiling could hurt Canada. "The closer you get to the edge of the cliff, the odds increase that somebody trips, so it's a problem," said Craig Wright, chief economist at RBC Capital Markets.

Finance Minister Jim Flaherty said he was confident of a quick resolution to the U.S. showdown and put the focus on the high level of public debt in Washington.

"That's a real long term problem for the U.S. and the global economy that needs to be tackled credibly," Flaherty said.


Canada's Finance Minister Jim Flaherty makes an announcement in Ottawa September 9, 2013. REUTERS/Blair Gable