Global economy still faces risks, G-7 says

A meeting of G-7 officials in Japan acknowledges that “downside risks” remain for the global economy, in part because of dangers stemming from the U.S. housing crisis.

However, the joint statement issued Saturday offered assurances that U.S. growth was expected to continue in 2008.

“The world confronts a more challenging and uncertain environment than when we met last October, though its fundamentals as a whole remain solid,” the statement said.

The officials also asked oil-producing nations to boost output, and called on China to accelerate the appreciation of its currency’s value.

“Going forward, we will continue to watch developments closely and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies,” the statement said.

Finance chiefs and central bank governors from the United States, Japan, Germany, France, Canada, Britain and Italy attended the meeting, held in Tokyo.

Going into the meeting, there had been calls for some type of joint action to deal with:

* Economic threats posed by the U.S. housing crisis and resulting credit crunch;
* Turmoil in the stock markets;
* High oil and commodity prices, and
* Rising inflation worries.

However, there is no consensus on what should be done.

The United States told other countries they should try to boost their domestic demand.

The European nations said their economies were fine, and wanted to speak about regulatory co-ordination.

“It is important that each nation take measures that are appropriate for that nation,” Fukushiro Nukaga, Japan’s finance minister, told reporters after the meeting.

The countries do remain open to working together, he said.

“The current financial turmoil is serious and persisting,” said Henry Paulson, U.S. treasury secretary. “While financial markets are improving, it will take time to work through the current financial turmoil.”

Paulson said he expected continued growth in the U.S. economic in 2008.

European Central Bank President Jean-Claude Trichet said Europe’s economy is basically sound and that his organization’s priority is to fight inflation.

“We will do whatever we need to do to be credible in maintaining price stability in the medium term,” he told reporters.

But the volatile financial markets were creating “unusually high uncertainty in the real economy,” he said. -AP