LONDON, Feb 5 (Reuters) - U.S. Treasury Secretary Paul O'Neill was quoted on Tuesday as saying U.S. economic growth could outstrip forecasts with annualised quarterly growth in the latter part of the year possibly topping five percent.
O'Neill was quoted in an interview in London's Times newspaper as saying that the U.S. administration's growth forecasts were quite weak given the prospects for an economic recovery.
He also said the dollar's strength was not a problem and reflected the fact that capital was flowing into the U.S..
U.S. President George W. Bush presented on Monday a budget which foresees gross domestic product growth of 0.7 percent in 2002 and 3.8 percent in 2003. The Times said the budget forecast 3.0 percent annualised growth rates in the third and fourth quarters of this year.
"The growth we have forecast is pretty weak for the first year of an economic upswing," O'Neill said.
"I personally think that a more typical recovery is quite likely; in that case we would see a few quarters growth of five percent plus," he said.
Business investment would kick in from the second half of this year.
"Beyond that, the U.S. economy has the potential to grow by three to 3.5 percent for the indefinite future," he said.
O'Neill said the current U.S. downturn was not a conventional recession but"an incredibly shallow and very brief slowdown".
"In fact, I believe that if it hadn't been for September 11, there wouldn't have been a recession at all."
O'Neill said the strength of the dollar and the U.S. current account deficit were not a problem and reflected the fact that capital was flowing to the U.S. from all over the world. This should be seen as a sign of economic strength."I don't think this so-called problem is of any consequence at all," he said.
O'Neill was quoted as saying the U.S. should not be the only locomotive of growth in the world and that Europe and Japan should be parallel engines.
"Potential growth rates should not be very different in Europe, Japan and the U.S.," he said.
"All our political leaders should make a commitment to achieve sustainable growth towards the outer edge of what is possible and we should take whatever action is necessary to get there," he said.
O'Neill was quoted as saying the U.S., Europe and Japan should seek to maximise growth not just for their own people but for the sake of the developing world.
((Nigel Stephenson, London Capital Markets, +44 20 7542 8682, fax +44 20 7542 5285, nigel.stephenson@reuters.com))




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> LONDON, Feb 5 (Reuters) - U.S. Treasury Secretary Paul O'Neill was quoted on Tuesday as saying U.S. economic growth could outstrip forecasts with annualised quarterly growth in the latter part of the year possibly topping five percent.
> O'Neill was quoted in an interview in London's Times newspaper as saying that the U.S. administration's growth forecasts were quite weak given the prospects for an economic recovery.
> He also said the dollar's strength was not a problem and reflected the fact that capital was flowing into the U.S..
> U.S. President George W. Bush presented on Monday a budget which foresees gross domestic product growth of 0.7 percent in 2002 and 3.8 percent in 2003. The Times said the budget forecast 3.0 percent annualised growth rates in the third and fourth quarters of this year.
>"The growth we have forecast is pretty weak for the first year of an economic upswing," O'Neill said.
>"I personally think that a more typical recovery is quite likely; in that case we would see a few quarters growth of five percent plus," he said.
> Business investment would kick in from the second half of this year.
>"Beyond that, the U.S. economy has the potential to grow by three to 3.5 percent for the indefinite future," he said.
> O'Neill said the current U.S. downturn was not a conventional recession but"an incredibly shallow and very brief slowdown".
>"In fact, I believe that if it hadn't been for September 11, there wouldn't have been a recession at all."
> O'Neill said the strength of the dollar and the U.S. current account deficit were not a problem and reflected the fact that capital was flowing to the U.S. from all over the world. This should be seen as a sign of economic strength."I don't think this so-called problem is of any consequence at all," he said.
> O'Neill was quoted as saying the U.S. should not be the only locomotive of growth in the world and that Europe and Japan should be parallel engines.
>"Potential growth rates should not be very different in Europe, Japan and the U.S.," he said.
>"All our political leaders should make a commitment to achieve sustainable growth towards the outer edge of what is possible and we should take whatever action is necessary to get there," he said.
> O'Neill was quoted as saying the U.S., Europe and Japan should seek to maximise growth not just for their own people but for the sake of the developing world.
>((Nigel Stephenson, London Capital Markets, +44 20 7542 8682, fax +44 20 7542 5285, nigel.stephenson@reuters.com))


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