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The BBC's Linda Duffin
"Mr. O'Neill threw currency markets into confusion"
 real 56k

Sunday, 18 February, 2001, 01:00 GMT
Economic growth will be 'slower'
G7ministers
Ministers say economic fundamentals remain strong
Finance ministers from the Group of Seven (G7) nations are forecasting a slowdown in the global economy this year, but say that many industrial nations, including the United States, retain the basis for future growth.

Growth will be slower than expected at the G7's last meeting in September, but basic factors supporting sustained growth remain in place

G7 statement

In a statement issued after their meeting in the Italian city of Palermo, the ministers said US fiscal and monetary policies should support growth.

The meeting had focused on the slowdown of the US economy and fears that, after years of stagnation, the Japanese economy is once again shrinking.

But BBC economics correspondent Andrew Walker says the hoped for rebound is far from assured.

One sign of the uncertainty came from an anonymous G-7 official in Palermo, who said that the IMF has almost halved its forecast for US economic growth this year to1.7%

Despite these doubts, the US Federal Reserve chairman, Alan Greenspan, has expressed optimism that his country's economy will recover fairly quickly.

Washington's new Treasury Secretary, Paul O'Neill, called on Europe and Japan to contribute to global economic expansion, instead of relying on the US to provide growth.

World contribution

"The world must not rely on the United States as the engine of global growth," Mr O'Neill said.

Alan Greenspan
Greenspan is optimistic
"Europe and Japan must tackle challenges in their economies to help contribute to global expansion and a reduction in external imbalances."

But Europe says it cannot be the main engine of the global economy.

Belgian Finance Minister, Didier Reynders, told AFP news agency the euro zone could not support the world's activity in the two years to come.

Pressure

Japan also came under pressure to ease concerns about the slowdown in the world's second biggest economy.

The G7 ministers said the country is set for a modest economic recovery, but is threatened by deflation and risks remain.

The ministers warned Japan it needed to make further efforts to strengthen its financial sector.

The G7 is made up of the world's most industrialised nations, which include the United Kingdom, the United States, Canada, Japan, Germany, France and Italy.

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