Instead, we must work to ensure that the better performance projected for the year 2000 actually occurs. In Europe, growth is projected to be sluggish this year in the largest countries. The European Central Bank's interest rate cut is a helpful step, and macroeconomic policies need to remain supportive of recovery. Structural reforms are important, too, if Europe wants to see higher private investment and sustained job creation. Such reforms have the potential as well to rebalance domestic saving and investment and thereby help to correct global current account imbalances.
Japan remains in recession, and both business and consumer confidence remain low.
Asian recovery would benefit greatly if currently weak Japanese economic prospects could be improved. While Japan has taken some important steps to support its economic recovery, there is a need to continue to implement stimulus measures, utilizing all available tools, until strong and sustainable domestic demand-led growth is restored. In addition, Japan needs to build on the important steps already taken to stabilize its financial sector and, like Europe, accelerate structural reforms to help investment to recover and reduce high trade and current account surpluses. The combination of sustained strong domestic demand growth in the United States and weak growth in many trading, partner countries has led to a major deterioration in U.S. trade and current account balances. In some ways, another large increase in our current account deficit could be beneficial for world recovery.