G7 ministers urge Europe and Japan to boost flagging growth

Europe must do more to boost economic growth, the G7 finance ministers have said. Meeting ahead of this week's gathering of the IMF and the World Bank in Washington, the G7 ministers have called on both the euro zone economies and Japan to intensify efforts to bolster international economic prospects.

The ministers and central bankers from the Group of Seven top industrial nations said that the world outlook was improving and said they would to do all they could to foster growth and stability in the world economy. But they warned serious challenges remained after almost two years of financial crisis.

The finance ministers and central bankers, in a statement released after a day-long meeting, specifically called on Japan and Europe to act to boost flagging growth rates. They also reiterated their commitment to limit fluctuations in key currency values by continuing to co-operate in foreign exchange markets.

In an eight-page statement, the G7 - the United States, Britain, Canada, France, Germany, Italy and Japan - said they will pursue policies to promote more balanced growth among key economies and thereby help avoid excess volatility and significant misalignments of exchange rates among major economies.

The statement said that, despite measures already implemented by Japan, short-term prospects "remain uncertain" for Asia's leading economy. It said that it was vital for Japan to do whatever was necessary to restore growth.

As for states in Europe that now use the euro as their currency, the G7 statement said growth prospects "have weakened" in recent months and all agreed that it was important to introduce policy changes to boost growth and to create jobs in the region. However, there were no specifics set down as to what might be done.

The US has been pressing its major EU partners for some time to boost growth and not to leave the international economy reliant on US growth as a stimulant - the statement after yesterday's meeting was seen as highlighting sluggish growth across most of the euro zone very clearly. However, with euro interest rates recently cut by a full half a percentage point, it is not clear what the eurozone authorities can do in the short term to boost activity. The statement called for structural policies - such as labour market reforms - and macroeconomic policies designed to boost growth in the medium term.

The G7 members said prospects were good for another year of strong economic expansion in the US and Canada. Even before the meeting began, US officials were pressing Japan and Europe to do more to get their sluggish economies moving, warning that the global economy could not keep growing with only the US economy expanding.