NEW YORK (AFX) - Treasury Secretary Paul O'Neill said the US will be the engine of growth to revive the sluggish world economy next year.
"I remain optimistic that we are going to see higher growth next year, and that, as we did in 1998, the US economy will lead the world back to the path of prosperity," O'Neill said in prepared remarks to the Bond Market Association here.
O'Neill was optimistic on the prospects for the world's largest economy as he called on two of its largest trading partners to redouble efforts to increase global growth.
"I believe the US economy has the flexibility to adjust and recover very quickly," O'Neill said.
"A strong world economy requires growth from the three largest economies in the world, the United States, Europe and Japan." He noted that rebates from the Bush administration's tax cuts, which begin being mailed tomorrow, will help stimulate the US economy toward higher growth rates.
"The rebates will have an added stimulus effect because they are connected to long-term tax rate reductions," O'Neill said, adding that private forecasts show that the tax cut will increase growth from 0.5-1.5 pct going forward.
The Treasury official further said recent troubles in Europe and Asia validated his earlier remarks that the economies of the world are inescapably interconnected.
"We've seen increasing reports of how the slowdown in the US is affecting other economies, from Singapore to Germany -- making the fiscal and monetary policy steps taken this year to boost the US economy even more important."