U.S. News

Paulson: Global Economy Is Strong, Inflation Is Low

Associated Press

U.S. Treasury Secretary Henry Paulson expressed confidence Wednesday in the global economy, calling it strong and characterized by low inflation.

"We have a very strong global economy," Paulson told reporters after meeting South Korean Finance Minister Kwon O Kyu. "We have a global economy with low inflation, high levels of liquidity and I feel very comfortable with the global economy."

Paulson made the remarks when asked if thought the worst of the recent global stock sell-off was over after markets worldwide, including in the United States, rose Tuesday.

Paulson, in the middle of a three-nation Asian tour, arrived in South Korea late Tuesday from Japan and was scheduled to depart for China later Wednesday.

On Tuesday in Tokyo, he said that the global economy is as strong as he's ever seen it and that reforms in China would help lessen the kind of market volatility that has recently rocked international stock markets.

Stocks rallied Tuesday as global markets, including those in Asia, Europe and the United States, began to reverse a weeklong sell-off, fanning hopes that the trading turmoil may finally subside.

On Wall Street, the Dow Jones industrial average rose 157.18, or 1.30%, to 12,207.59, after dropping 581 points over the past week.

In Seoul, he was also scheduled to hold talks with Trade Minister Kim Hyun Chong and President Roh Moo Hyun before departing at midday for China.

During his brief stop in South Korea, his first since becoming treasury secretary in July, Paulson is likely to discuss efforts by the United States and South Korea to conclude an ambitious free trade agreement.

In opening remarks with Kwon, Paulson lauded the relationship between the two countries. "We're very, very pleased with our relationship with your country," Paulson said, adding that he was looking forward to discussing the proposed free trade deal.

Free trade negotiators for the two sides plan to meet in Seoul for five days from Thursday in an attempt to conclude an agreement by the end of this month. If successful, it would be the biggest such deal for Washington since the North American Free Trade Agreement in 1993.

Before Paulson's arrival Tuesday, about 10 trade unionists demonstrated peacefully outside the U.S. Embassy against the visit, chanting slogans and holding signs criticizing the proposed accord.  "Go Home! Henry Paulson" read one of the placards in English.