Group of Seven Communiqué: Surveillance, Catalytic Financing Remain Key to IMF's Central Role in Crisis Prevention

• Pages: 321-322

Page 321

Developments in the World Economy

We discussed developments and prospects in our own economies and in the rest of the world. Financial market conditions have deteriorated in many parts of the world, leading to a further weakening of growth prospects, especially in most emerging market countries and also more generally. In this context, we reaffirmed our view that the balance of risks on a global basis has shifted. We agreed that, in today's integrated world economy and financial markets, developments in our economies, while being affected importantly by economic and financial developments elsewhere, have a significant impact on the rest of the world. More broadly, we reaffirmed the key importance going forward of each country in the global economy doing its part to promote recovery and financial stability. We must continue our efforts to strengthen the open world trading system, with free trade flows and open capital markets.

G-7 Economies

Inflation in the G-7 countries as a whole is low, and, in some countries, has declined further in recent months. Although growth so far has been sustained in our countries taken as a whole, the weakening in Asia and some other markets poses increasing downside risks to economic activity. We reemphasized our commitment to create or sustain conditions for strong domestic-demand-led growth and financial stability in each of our economies. In this context, we noted the importance of intensified cooperation among us at this juncture. We also agreed that the challenges that face each of our economies differ.

- In the United States, Canada, and the United Kingdom, where strong growth has been firmly established for some time, the task of policy is to take appropriate action to maintain conditions for sustainable growth.

- The continental European G-7 countries are expected to achieve stronger growth this year as their recoveries strengthen. It is important to preserve conditions conducive to robust domestic demand, implement urgent structural reforms, and reduce unemployment.

- Japan's economic challenges have intensified significantly in recent months, with three consecutive quarters of negative growth and continued weakness in the financial sector. Strong sustainable recovery in the economy is...