TOKYO (AFX-ASIA) - U.S. Treasury Secretary Paul O'Neill said the largest problems in the recent downturn are confined to the technology sector and the economy may not be as weak as recent labour data suggest.
"The box-making part of the technology sector's got an overcapacity problem and it also turns out, contrary to what a lot of them believed, that after all they're not immune to cycles," O'Neill told the Financial Times.
O'Neill said energy shortages in California would probably spread to New York City this summer.
"In New York City there is plenty of power north of the city but, because there haven't been any transmission lines built for a while, they can't get it into the city," he said.
"So when they have really heavy demand this summer for air conditioning, they're probably going to have some problems." O'Neill, along with U.S. President George W Bush's chief economic policy adviser Lawrence Lindsey, also interviewed by the newspaper, welcomed the new reformist government in Japan.
However, the newspaper said they rejected any role for the U.S. in fostering faster growth for Japan or Europe.
O'Neill called for an end to efforts at bilateral measures to help countries facing financial crises and said the world should work on the principle that multilateral institutions are the main agency for assistance.
"Why don't we put whatever money is required into the IMF and World Bank and do it as a pooling of resources for the whole world, instead of bilateral?" he said.