G7 finance chiefs see growing risks to global economy

TOKYO, Feb 9, 2008 (AFP) – Top world finance ministers warned Saturday that the global economy faces growing threats from a US housing slump and credit crunch, urging banks to come clean on their subprime loan losses. The role of ratings agencies, which have been criticised for not flagging up the impending global credit woes, is also expected to be discussed by the G7, along with efforts to tackle climate change. The finance chiefs from the Group of Seven industrialised nations said their economies were set to lose steam in the near future but remained fundamentally solid, according to a draft statement from a meeting here Saturday.

“In all our economies, to varying degrees, growth is expected to slow somewhat in the short-term, reflecting wider global economic and financial developments,” according to the statement obtained by AFP.

The US economy faces growing risks with the potential for a further deterioration in the housing sector, according to the draft.

“In the United States, output and employment growth have slowed considerably and risks have become more skewed to the downside,” said the G7, which groups Britain, Canada, France, Germany, Italy, Japan and the United States.

The ministers warn