Hansson: US Debt Ceiling Problems Jeopardize Global Economy ({{commentsTotal}})

Source: Photo: Postimees/Scanpix

Government shutdown and the recurring prospect of default have made the US the problem child of the world economy, Bank of Estonia Governor Ardo Hansson told ERR radio.

He said it would be a challenge to find ways of "tightening up the [current monetary policy] without harming the rest of the world."

In an interview conducted at the International Monetary Fund annual meeting in Washington, Hansson also said that even fast-growing countries had to find ways of keeping their competitiveness up. Hansson noted that developing economies such as China and Brazil would fall on harder times if the most advanced economies start growing faster.

"When money is cheap, much of the capital flowed to [developing economies] and they had growth potential. Now these simple growth sources are drying up and they must be sure to accelerate new structural reforms and be prepared - if US interest rates rise it could impact them negatively," said Hansson.