U.S. Treasury Secretary Jacob Lew on Wednesday warned the euro zone of the risk of deflation, adding pressure on European authorities and the European Central Bank (ECB) to act to accelerate growth. "The risk of low demand and the risk of deflation is something they need to be very alert to," Lew told CNBC financial-news television. Speaking two days ahead of a meeting of Group of Twenty (G20) finance ministers and central-bank governors in Washington to discuss the global economic situation, Lew said countries with strong fiscal and trade surpluses should do more to increase demand, in an effort to help deficit countries. "In Europe as a whole, the growth rate is very modest, the risk of deflation is something that has a lot of people concerned," the U.S. Treasury chief said. "There is a demand problem in the world, and there is a demand problem in Europe," Lew said. "There are a number of countries that could do more, and Germany obviously is one of the surplus countries in Europe." The Treasury secretary suggested that more investment in infrastructure could help increase demand, thereby countering the deflationary pressures from slow economic growth.
