New Delhi/Davos, Jan 21 (PTI) Calling for global cooperation to address common challenges facing the world, US Treasury Secretary Janet L Yellen on Friday said the COVID-19 pandemic has shown the intertwined fates of everyone on this planet by demanding a truly global response, as alleviating the virus within one country’s borders also requires fighting it abroad.
Addressing the World Economic Forum’s online Davos Agenda 2022 summit, she said climate change also represents an existential threat that will require close global coordination and robust efforts by individual countries to reach their net-zero commitments.
Yellen also asserted that the pace of the US economic recovery has exceeded even the most optimistic expectations and that was due in large part to rapid vaccine deployment and the robust support to families, businesses, and state and local governments provided by the American Rescue Plan.
“We have all been living through the COVID-19 pandemic for roughly two years now. Policymakers, businesses large and small, and families alike have grappled with the uncertainty and unexpected twists of this ruthless pandemic and its associated economic disruption,” she said during the last session of the week-long WEF event.
Yellen said some longstanding challenges persist, and some were exacerbated by a pandemic that disproportionately impacted low-wage workers and minorities.
“We still face growing divergence between rich and poor, within and between countries, along with the mounting risk of climate change. Our navigation of these health and economic challenges will be consequential: for ending the pandemic, for mitigating climate change, and for ensuring the stability and prosperity of our respective economies and the global economic system,” she added.
She also talked about the Biden administration’s strategy to sustain economic recovery and to address longstanding structural issues relating to income inequality, racial disparities, and climate change.
On the US economy, Yellen said the aggregate growth has been rapid and continued, with real GDP expected to have grown at 5.3 per cent in 2021 while the US labour market is also exceptionally strong.
She said a country’s long-term growth potential depends on the size of its labour force, the productivity of its workers, the renewability of its resources, and the stability of its political systems.
“Modern supply-side economics seeks to spur economic growth by both boosting labour supply and raising productivity, while reducing inequality and environmental damage. Essentially, we are not just focused on achieving a high topline growth number that is unsustainable, we are instead aiming for growth that is inclusive and green,” Yellen said.
She said the economic moment is well-suited to accommodate such a modern supply-side expansion.
Yellen said the labour supply has been a concern in the US even before the pandemic, in part due to an aging population and in part due to a labour force participation rate that has trended downward over the past 20 years.
“Now COVID-19 and declining immigration have further reduced the workforce. The lagging labour force participation rate is driven in large part by a combination of factors that disincentivize work, such as inadequate paid leave and high childcare costs,” she said.
Yellen further said that the Biden administration’s leadership in negotiating this multilateral tax agreement is emblematic of their larger commitment to multilateral collaboration.
“Global cooperation is vital to address the common challenges that all of us now face,” she said.
Expressing optimism about the US economic recovery, she said, “We have a clear path forward with the recently passed infrastructure package and the proposed Build Back Better plan. Together these policies will promote a modern supply-side expansion that boosts long-term sustainable growth, protects the environment, and distributes expanding national income more equally.” “I am confident that we can beat this pandemic and move decisively down the path toward a more prosperous future,” she added. PTI BJ MKJ
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