SEOUL, Nov 10 (Reuters) - The main economic risk to the world is the prospect of advanced economies underachieving on growth, U.S. Treasury Secretary Timothy Geithner and his counterparts in Australia and Singapore said.
In a joint opinion piece due for Thursday's edition of the Wall Street Journal-Asia, Geithner, Australian Treasurer Wayne Swan, and Singaporean Finance Minister Tharman Shanmugaratnam said countries around the world must work to promote economic expansion because global growth is still not strong enough.
"The main risk for the world is not inflation in the advanced economies, where inflation expectations are stable at relatively low levels, but that the advanced economies underachieve on growth," the ministers wrote.
"Those economies must look for ways to strengthen underlying foundations of long-term growth, including fostering innovation and developing higher skills in the labour force, removing impediments to market entry, and providing stronger incentives for labour force participation."
The ministers endorsed agreements reached last month by Group of 20 finance ministers to limit external imbalances and to avoid competitive devaluation of currencies, key points being negotiated for G20 leaders now gathering in Seoul.
Geithner, Swan and Tharman said currencies of major advanced economies -- widely viewed as the dollar, euro and yen -- were "roughly in alignment with each other".
But they said emerging market countries "need to allow their exchange rates to reflect the substantial growth they have achieved in their economies over the last decade and to respond more flexibly to underlying market forces".
They said the framework for limiting external imbalances can be a "useful early warning system" of economic trouble, but should take into account differences between countries and "practical realities". Swan has said, for example, that Australia is now running a current account deficit because of strong foreign investment in its mining sector.
Germany, which has a structurally high current account surplus because of its export industries, is among a number of countries opposed to numerical targets for current account balances.
The three ministers also called on the G20 to resist protectionist pressures.
"We need to continue to keep our markets open and work to expand trade and maintain a level playing field across countries. Growth in the emerging economies still depends on access to products and services of the advanced economies."
Geithner met Tharman and Singapore's prime minister, Lee Hsien Loong, on Wednesday in Singapore before travelling to Seoul for the G20 summit. He also met local financial industry executives and the city-state's two sovereign wealth funds. (Reporting by David Lawder; Editing by Giles Elgood)