Group of Seven statement: Ministers welcome prospects for recovery, note that a number of challenges remain

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Developments in the world economy

We welcomed the improvement in prospects for recovery in the major industrial economies and the world economy as a whole. At the same time, we noted that we still face a number of challenges in fostering a strong and sustained world recovery with financial stability to promote improved living standards.

The improved global economic outlook has been characterized by the beginnings of a foundation for balanced and widely shared growth in the major industrial countries; a solidifying recovery in emerging markets in Asia; signs of stability and even incipient recovery in some of the other emerging markets that have come under pressure; more differentiation in financial markets about risk in emerging market economies, with some resumption of financing flows; and an environment of low inflation. In general, the balance of risks in emerging market economies suggests a continuing need to focus on reform to promote the basis for lasting growth.

Group of Seven economies

We reaffirmed the importance of progress in achieving a more balanced pattern of growth among the Group of Seven economies.

We pledged to continue to work cooperatively to improve the international economic outlook and to strengthen financial stability.

- In the United States and Canada, prospects are favorable for another year of solid growth and job creation in a low-inflation environment. Policies will be directed to sustaining growth on a long-term basis by maintaining improved fiscal conditions and, in the United States, increasing national saving.

- Growth in the United Kingdom has strengthened during this year. Economic policies will continue to aim at sustaining growth and employment while meeting the government's inflation target and fiscal rules.

- Overall prospects in the euro area have improved significantly, with stronger domestic demand. An appropriate mix of macroeconomic and structural policies aimed at strengthening growth and employment over the medium term will continue to be important.

- Japan's economy has shown signs of positive growth, although prospects for continued recovery in private demand remain uncertain. In these circumstances, and in view of the yen's appreciation, the

Japanese authorities reiterated their...