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LONDON: Inflation, and not the credit crunch, is the biggest economic concern worldwide, especially in developing countries, US Treasury Secretary Henry Paulson said in an interview Thursday.
Speaking to the BBC on a visit to London, Paulson also said the comparison of the current economic climate in the United States to the Great Depression in the 1920s and 1930s was "hyperbole".
Asked by the broadcaster whether the credit crunch or price rises were more of an issue, he said: "When you look around the world broadly, I think inflation ... is getting the number one focus, when you look at emerging markets, whether its China, or Russia."
"When you look at not just oil prices, but food, in areas where there is poverty, this is a huge problem," Paulson added, noting that despite concerns over inflation, he was "very supportive" of interest rate cuts by the Federal Reserve.
On the comparisons between America's present-day economic woes and the Great Depression, Paulson insisted the United States had "strong long-term economic fundamentals" and described the comparison as "hyperbole".
"In the Great Depression, we had foreclosures at 50 per cent, today they're two per cent in the US. Over 90 per cent of the people are making their mortgage payments on time," Paulson said.
"In the Great Depression, there was unemployment of 25 per cent. We're above five per cent," he said, adding that the United States was "working our way through the problems."
Earlier on Thursday, Paulson said the US economy would most likely be stronger at the end of 2008, after holding talks with his British counterpart Alistair Darling.
The pair had earlier discussed ongoing financial turmoil, which has largely been caused by the credit crunch and soaring oil prices.
- AFP/yb
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