Oct 3, 2009, 16:04 GMT
Istanbul - The world's seven leading industrial nations on Saturday committed to keeping in place massive government support measures as a tentative global economic recovery takes shape.
The Group of Seven (G7) also warned against 'complacency' in the face of what will likely be a weak recovery, according to a joint statement released after a meeting of the bloc's finance ministers and central bankers in Istanbul.
'The prospects for growth remain fragile and labour market conditions are not yet improving,' the statement said. 'We will keep in place out support measures until recovery is assured.'
Governments and central banks have spent hundreds of billions of dollars in the past year to keep their economies afloat amid the worst global recession since World War II. The G7 did pledge to plan for an eventual pull-out of public spending.
'We need to avoid the mistakes made in past crises when policy makers stepped on the brakes too soon,' said US Treasury Secretary Timothy Geithner.
But he added: 'Exit will not be like flipping a switch. Instead, as conditions stabilize and growth strengthens, we will unwind the extraordinary policy measures we've taken, phasing them out carefully to avoid a damaging cliff.'
The G7 also backed promises of closer cooperation and reforms of financial regulation that were agreed at a summit of the Group of 20 (G20) nations last month in Pittsburgh, Pennsylvania.
'We remain committed to delivering all necessary action to lay the foundation for strong, sustained and balanced growth and complete our regulatory reform agenda,' the statement said.
The G7 ministers came together on the sidelines of the International Monetary Fund (IMF) and World Bank's annual meetings in Istanbul. The G7 includes the US, Japan, Britain, France, Germany, Italy and Canada.
Yet their meeting comes after the G20 declared itself the primary forum for future economic talks, a nod to emerging economies that are fast becoming drivers of global growth. The G20 includes G7-countries as well as major developing powers such as China, India and Brazil.
Germany's Deputy Finance Minister Joerg Asmussen said the G7 still had a future as a forum for wealthy countries to find common ground. He said Germany would like to see the bloc become an informal meeting to prepare for future summits of the G20.
US officials have also said the G7 will continue to play a future role in coordinating policies among the world's wealthiest nations, who have been regularly meeting as a bloc since the 1970s.
Faced with the G20's new primacy, the seven countries had considered not even putting out an official communique after their meeting.
Industrial nations are also battling to maintain their dominance of the IMF and World Bank. Developing country finance ministers, meeting as a bloc called the Group of 24, said Saturday they would not be satisfied until they had an equal say in the world's major financial institutions.
Leaders of the G20 agreed last month to boost developing countries' voting shares in the IMF and World Bank, but the offer fell just short of giving poorer nations an equal voice.
Finance ministers were meeting after the IMF declared this week that the world has emerged from recession, but will face a sluggish recovery and more job losses in the coming year. The world economy will grow by 3.1 per cent in 2010, the IMF predicted.
The meeting also comes amid fears that declines in the dollar could curb the global recovery by raising export costs for other countries. The US currency has dropped nearly 13 per cent against seven major currencies this year.
The G7 ministers said they would 'continue to monitor exchange markets closely and cooperate as appropriate.'
Finance officials from the US and Europe sought to assure markets ahead of the meeting that a 'strong dollar' remains in everyone's interest.
The statement also welcomed China's continuing commitment to allow a slow appreciation of its renminbi currency. Yet German Bundesbank head Axel Weber said the wording remained exactly the same as that from the G7's last statement in April.
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