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Sunday, 29 April, 2001, 00:26 GMT 01:26 UK
G7 bullish on growth prospects
Group of Seven (G7) finance ministers gather
The G7 ministers have gathered in Washington
By BBC News Online's David Schepp in Washington

European finance officials have reasserted their belief that a slowdown in the US economy will have little effect on European countries.

They said the European Central Bank's decision to resist pressure to reduce interest rates was supported by a statement from the Group of Seven industrialised nations (G7).

The joint statement, which followed a meeting of G7 finance ministers in Washington on Saturday, said that although global growth had slowed over the past year, the foundations for economic expansion were sound.

Wim Duisenberg, President of the European Central Bank
Duisenberg: Reluctant to cut rates in Euroland
It acknowledged that growth in the US had slowed sharply, while in the euro area growth prospects had "moderated, though remain favourable".

The European Central Bank, which governs interest rates as they relate to the euro, has faced harsh criticism in recent months for its decision to stand firm on interest rates.

The US, by contrast, has slashed interest rates four times this year - by a total of two percentage points - in an attempt to encourage economic activity.

In a press briefing following the G7 meeting, three influential European finance officials defended the independent stance of the European Central Bank (ECB).

ECB President Wim Duisenberg told reporters that different policy makers would approach policy issues in different ways. "It is not our intent to direct each other," he said.

Mr Duisenberg added what many in financial circles have been saying for months - that it is too soon to tell what economic data emerging from the US may mean for the world economy.

He said the G7's assessment of European economic health was made independently of US figures, and Europe's economy was healthy enough to weather a worldwide economic slowdown.

Belgian Finance Minister Didier Reynders said growth prospects in the European Union area were "sound", adding that the implementation of the single-currency euro among participating countries would strengthen the area.

Japan and Asia

The G7 statement reported that Asia, after two years of strong growth, showed clear signs of a slowdown.

"Throughout the region, the implementation of structural reforms will be crucial to fostering strong, sustained growth," it said.

G7 officials are taking a wait-and-see attitude on Japan's stalled economy, giving new reformist Prime Minister Junichiro Koizumi a chance to put his new economic plan into force. G7 officials did say, however, that vigorous implementation of financial and corporate sector reforms were needed.

The ministers also welcomed a new economic plan put forward by the Turkish Government that has been accepted by the International Monetary Fund and the World Bank.

"We look forward to Turkey's rigorous implementation of all these necessary measures," the finance ministers said.

In addition, the G7 said they intended to work constructively to tackle major infectious diseases - tuberculosis, malaria and Aids.

They also want the IMF to step up its efforts to identify early warning signs of impending financial crises. That is something the IMF chief, Horst Koehler, already treats as a priority.

Terror's impact

Signs of a slowdown

Rate cuts


Key players

See also:

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