By Paul Vieira
European economies need to quickly embrace a fiscal-stimulus
plan because the region is "perilously close" to deflation,
Canadian Finance Minister Joe Oliver said Sunday, warning such a
turn could have negative consequences for a global economy.
"What we do not want, of course, is to see Europe enter into a
deflationary spiral," said Mr. Oliver, who spoke to Canadian
reporters via teleconference after wrapping up a meeting in Cairns,
Australia, of finance and central-bank chiefs belonging to the
Group of 20 major industrialized and emerging economies. "It must
be avoided for the good of Europe and the good of the global
economy."
At the summit, Mr. Oliver and his peers reaffirmed a pledge to
sharply boost global growth, adding through the G-20 communique
global growth was "uneven" and remained at a pace below the level
needed to generate adequate jobs growth.
Canada's economy has slowed noticeably since an early burst
following the end of the recession, and employment growth has been
tepid for more than a year, with the unemployment rate holding
steady in the 7% range while the U.S. has recorded a steep
decline.
Mr. Oliver's call for a Europe-wide stimulus program marks a
change of course for Canada, which since 2010--when it hosted the
G-20 leaders' summit in Toronto--has been at the forefront
advocating the need for major developed economies to address
ballooning debt and deficit levels in an effort to restore investor
confidence and boost growth.
In his call with reporters, Mr. Oliver said Canada needs to show
some flexibility on fiscal targets within the G-20, which Canada
has championed in the past, because some countries need to
undertake stimulus and structural changes "to get the growth
going."
The stimulus, such as increased infrastructure spending, that is
eventually adopted by countries should be accompanied by a fiscal
plan detailing how and when governments plan to return their budget
balances to more stable levels, the Canadian minister said, adding
that is what Canada did with its multiyear initiative. Canada is
now on the verge of recording a budget surplus next year.
Write to Paul Vieira at paul.vieira@wsj.com