Economic optimism among the riots

Global leaders are meeting amid mass protests outside

The leaders of world's seven richest nations, who have started their 27th economic summit in Genoa, are giving an upbeat assessment of their economic prospects in the first full day of discussions.

They are expected to endorse comments by their finance ministers who say that the slowdown in the global economy would end in the second half of this year.

But many observers believe that the world could still be heading towards a recession, with growth in the United States, the world's biggest economy, grinding to a halt.

It is obscene that the leaders of the rich world can wine and dine in the splendour of a luxury liner while offering only crumbs of debt relief

Jessica Woodruffe, WDM

The slowdown is spreading to Europe and Asia, with the Japanese economy still weighed down by the burden of $1 trillion in bad debts.

Against this bleak backdrop, ongoing plans to launch a new round of trade talks have been impeded by controversy between rich and poor countries.

In an attempt to appease the thousands of demonstrators converging on Genoa, the leaders have announced a package of measures to help sub-Saharan Africa.

According to UN Secretary General Kofi Annan, these include a $1bn health fund to fight Aids, TB, and malaria.

African disappointment

But African leaders, meeting earlier in Rome, have condemned the plan as "too little, too late."

Thabo Mbeki of South Africa, Abdelaziz Bouteflika of Algeria, Nigeria's Olusegun Obasanjo and Senegal's Abdoulaye Wade are sceptical of the global health fund, which is the only concrete result expected from the meeting.

Mr Mbeki told reporters that Africa needed at least $10bn for Aids alone.

And there is disappointment that there are no fresh measures of debt relief.

Jessica Woodruffe of the World Development Movement said:

"It is obscene that the leaders of the rich world can wine and dine in the splendour of a luxury liner while offering only crumbs of debt relief."

This evening, the African leaders will be in Genoa to meet the presidents and prime ministers and put their case for more aid for Africa.

Trade row

Trade is at the top of most leaders' agenda, with the UK's Tony Blair arguing that a new trade round would do more than anything to revive the flagging world economy and help the poor.

UN Secretary-General Kofi Annan has been invited to attend

Although the leaders are expected to make some concessions towards poor countries - by calling for a "balanced approach" to the new trade talks - they are unlikely to resolve the deep-seated differences between the EU and the US.

President George W. Bush took the lead on Friday, telling the protesters, "I reject the isolationism and protectionism that dominate those who would try to disrupt the meetings in Genoa."

However, US leadership of any drive for free trade has been hampered by problems with the US Congress, which has so far refused to grant the President trade promotion authority to negotiate a new trade deal.

Global slowdown

Sharp differences are likely to emerge on how to revive the world economy.

Demonstrators against global capitalism travel to Genoa

President Bush is likely to recommend his tax-cutting approach to reviving economic growth, backed up by a series of interest rate cuts.

His $1.3bn tax cut plan was recently approved by Congress, while the US central bank, the Federal Reserve, has cut US rates six times this year to 3.75%.

But European leaders have been more cautious and the independent European Central Bank has been reluctant to take drastic action to restore economic growth.

And there appears to be little hope of an economic revival in Japan, despite the reformist hopes of new Prime Minister Junichiro Koizumi.

But Mr Bush's free-market approach precludes any major initiative of economic policy coordination, for example joint action to strengthen the euro or weaken the dollar.

"It really begins with each of our own countries making sure our economic houses are in order," Mr Bush said.

Economists expect the G8 leaders will talk up the world economy, but offer little concrete help for ailing economies like Argentina or Turkey.