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G7 says brighter world economy needs balance

WASHINGTON: The Group of Seven major industrial nations on Saturday called for more action to balance lopsided world growth and expressed relief that global economic prospects were looking up.

The draft of a statement expected to be released later on Saturday, after a meeting of G7 finance ministers and central bankers, did not make any specific reference to a sharp plunge in U.S. stock markets on Friday.

A section on recent trends in currency markets, which is usually included in the final version of such G7 statements, was left blank. G7 officials said earlier on Saturday they expected the final communique to contain a reference to the need for currency values reflecting economic fundamentals, repeating standard G7 language.

The group consists of Britain, Canada, France, Germany, Italy, Japan and the United States.

"Prospects for expansion in industrial countries and the world economy more generally continued to brighten," the draft statement said. "Further action is needed to promote a more balanced and therefore more sustainable pattern of growth among our economies."

Mirroring concerns expressed by the G7 at its previous meeting in Tokyo in January, the group said Japan's economy had yet to achieve a "secure" recovery. It noted that Japanese authorities remained committed to providing sufficient liquidity until deflationary concerns in the world's number two economy subside.

In the United States and Canada, the G7 noted that growth remained "very strong" and "inflation well contained", urging both countries to keep fiscal policies tight and monetary policies prudent. It also called for an improvement in the low U.S. savings rate.

In the euro zone, the G7 said growth was "set to strengthen further" this year but noted that it was important to continue implementing structural reforms to increase investment, employment and productive capital.

In Britain, the draft said "fiscal policy should remain prudent and monetary policy aimed at meeting the inflation target while sustaining growth and employment." The IMF last week criticised Britain for an unnecessarily accommodativebudget that risked raising inflationary pressures.

The draft also said that emerging market economies were well on their way to recovery from Asia's financial crisis of 1997-99. "However, it will be critical for countries to maintain the momentum of reform and continue to work to address potential underlying vulnerabilities," the draft said.

The group also said it looked forward to hearing more about Russia's plans to reform its ailing economy. "The Russian economy has strengthened during the past year, offering a unique opportunity to move forward with reforms," it said.

Russian finance officials were due to attend part of Saturday's closed-door meetings.-Reuters