Global economy will continue to grow, say world leaders

The leaders of the world economy have delivered an upbeat assessment for global growth, playing down the threat of a U.S

The leaders of the world economy have delivered an upbeat assessment for global growth, playing down the threat of a U.S. slowdown.

"Although global growth has slowed over the past year, the foundations for economic expansion are sound," said a joint statement issued after a meeting of finance leaders from the Group of Seven (G7) industrial nations.

"In fact, the prospects for improving the world standard of living are compelling."

U.S. Treasury Secretary Mr Paul O'Neill said at a briefing following the meeting that "there was a sense of real optimism" on global growth among participants.

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The statement from the ministers and central bankers from the Group of Seven countries - the United States, Britain, Canada, France, Germany, Italy and Japan - was carefully worded but clearly affirmed confidence that the slowing global economy would not slide into recession.

According to forecasts made this week by the International Monetary Fund, the global economy will grow by 3.2 percent this year after an almost 5.0 percent expansion last year.

Mr O'Neill said that he had not raised the issue of interest rates in the euro common currency zone and European Central Bank President (ECB) Mr Wim Duisenberg said separately that there had been no pressure on the bank to ease interest rates.

The ECB had been under fire for refusing to follow other G7 authorities in cutting interest rates this year. The IMF was among those leaning on the ECB to ease policy, saying the central bank should help shelter slowing world growth.

Mr Duisenberg said that the ECB's explanations had been received loud and clear, adding that its caution had been justified by the risks of inflation, which now looked likely to remain above its target range for the entire year.

"We understand that different countries will approach these policies...in different ways. We respect these differences and it is not our intent to give direction to each other," Mr Duisenberg said.

He said the ECB now expected inflation to remain above the upper range of its zero-to-two percent price tolerance range until early next year, indicating that its scope to cut interest rates this year was looking slim.

High energy prices were among factors pushing eurozone inflation to 2.6 percent in February and March and the G7 communique made direct reference to a renewed advance in the price of crude oil.

"We recognize that lower energy prices and stable oil markets are important," the statement said.

Crude oil has risen back above $25 per barrel and closed on Friday at $27.80 a barrel.