The US has told its global partners that sluggish growth in Japan and Europe was a danger for the entire world economy.
US Treasury Secretary Larry Summers said on the eve of a Group of Seven finance meeting that he wanted Europe and Japan to get their economies in shape to share the success of the United States - enjoying near-record growth with low inflation.
"You can't have balanced global growth without more rapid growth in both Europe and Japan," he said after talks with Japanese Prime Minister Mr Keizo Obuchi before a meeting of finance ministers and central bankers from the G7 industrial powers.
Japan's Kyodo news agency said Mr Summers had delivered a letter from US President Bill Clinton urging Japan to push for growth of 2 to 3 per cent, well above its target of 1 per cent growth in the new fiscal year.
Kyodo said Mr Summers had told Mr Obuchi 1 per cent was "by no means high" from the point of view of balanced world growth.
Japan sought to head off US criticism at today's meeting by pledging to keep interest rates near zero to ease the pain of deep economic reforms.
The question of whether Japan has the right policies to bolster a still-fragile recovery is likely to dominate the gathering, which takes place against a relatively benign backdrop of quickening global growth.
While Tokyo's priority appears to be to head off a further rise in the yen that could price its exports out of world markets, its G7 partners want to make sure it does not relax efforts to jump-start growth through ultra-low interest rates, massive deficit spending and reforms.
Besides Japan and the US, the G7 nations are Germany, Britain, France, Italy and Canada.
"The reason why it's widely believed that a policy focus on fundamentals is appropriate is because it is the fundamentals and policies that ultimately shape the economic outcome," Mr Summers said.
But his tone signalled the G7 was unlikely to go beyond a reiteration of "concern" over the effects of the rising yen on Japan, a formula it adopted at its last meeting in Washington.
