ISTANBUL: The world economy is growing faster than expected, but the recovery remains ``fragile'' and unemployment still looms as a problem, finance ministers from the Group of Seven rich countries said after they concluded their latest meeting on Saturday. They said in a joint statement that decisive actions had improved conditions for the economy and financial markets. But they warned ``there is no room for complacency since the prospects for growth remain fragile and labor market conditions are not yet improving.'' Government stimulus measures such as deficit spending and rock-bottom interest rates have helped the world economy bounce back from the deepest recession since World War II, and the International Monetary Fund this week urged governments to keep these in place until the recovery has been firmly established. The finance ministers agreed they will keep support measures ``until recovery is assured.'' In a statement following the meeting US treasury secretary Timothy Geithner said the world is recovering ``sooner and stronger'' than expected, and that financial conditions, particularly in the US, have ``improved dramatically.'' However, he said unemployment was unacceptably high - figures Friday showed the US economy shedding more jobs than expected in September, with unemployment at 9.8% - and that the financial sector remained ``damaged.'' ``Conditions for a sustained recovery, led by private demand, are not yet fully established,'' he said. The G-7 countries are the United States, Japan, Germany, France, Britain, Canada and Italy. Its role has recently been overshadowed by the Group of 20, which includes developing economic powerhouses such as China, India and Brazil. Last week the leaders of the G-20 agreed that the bigger body would become the world's ``premier'' economic decision-making forum, raising questions about the future of the G-7. There was no reference to the future of the G-7 in the communique on Saturday. Elsewhere in the joint statement, the finance ministers reiterated their view that they will ``continue to monitor exchange rates closely and cooperate as appropriate.'' However, there was no reference to the dollar's recent weakness against a host of currencies, particularly the yen and the euro.
POSTED BY: SHUBHAM AGARWAL
PGDM III SEM
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