Xinhua news services
September 24, 2003

Finance ministers and central bank chiefs from the Group of Seven most industrialized countries ended their one-day meeting in Dubai on Saturday by declaring the global economic recovery is “underway.”

“Recent data indicate that the global recovery is underway. Equity markets have rebounded, confidence has increased, financial conditions have improved, oil prices are expected to remain stable and inflation is under control,” the G-7 economic leaders said in a statement issued following the meeting.

“We reaffirm that exchange rates should reflect economic fundamentals. We continue to monitor exchange markets closely and cooperate as appropriate,” the statement said.

“In this context, we emphasize that more flexibility in exchange rates is desirable for major countries or economic areas to promote smooth and widespread adjustments in the international financial system, based on market mechanisms,” it added.

The finance ministers and central bank governors also agreed on an Agenda for Growth, saying higher growth is essential to raise incomes and create more jobs.

“Without higher growth, we will not have the resources to deal with an aging society, provided adequate national security, or, more generally, provide the means for people to pursue a more enjoyable life for themselves and their children,” said the statement.

It noted “Higher economic growth in the G-7 is one of the most effective ways we can reduce poverty around the world. Higher economic growth throughout the G-7 will readdress global imbalances that arise, inter alia, from uneven growth within the G-7.”

The G-7 economic leaders said their key objectives are on the supply-side – structural policies that increase flexibility and raise productivity growth and employment.

Macroeconomic policies should continue to support the recovery while ensuring medium-term fiscal sustainability. However, for growth to strengthen, be sustained and be less unbalanced, structural reforms must be accelerated, said the statement.

“We reaffirm our strong commitment to complete the Heavily Indebted Poor Countries Initiative. We urge all bilateral creditors to join with us in canceling out the 100 percent of their eligible claims,” it added.

The economic leaders also reiterated the importance of a rule-based and multilateral approach to trade, while expressing disappointment with the breakdown of trade negotiations in Cancun, Mexico.

“We urge a speedy resumption of the Doha Round which is vital for global growth and the alleviation of world poverty. We believe that the immediate blockage can be removed and, with an effort on all sides, agreement reached on the remaining issues,” the statement said.

The economic leaders also reaffirmed their commitment to fighting poverty and helping developing countries achieve the international development goals of the Millennium Declaration.

On the fight against terrorist financing, the G-7 ministers and bank governors noted that significant progress has been made, but much remains to be done.

Efforts have been intensified with some non-G-7 countries to “prevent abuse of non-profit organizations and alternative remittance systems,” the statement said, urging the International Monetary Fund and the World Bank to make the assessment of terrorist financing and money laundering a permanent part of their work.

The G-7 economic leaders also reaffirmed their support for multilateral effort to help rebuild and develop Iraq, based on needs assessment led by the World Bank at the Donors’ Conference, due to be held in Madrid next month.

“We support the IMF and the World Bank rapidly providing, subject to their policies, financial and other assistance to Iraq and call upon regional financial institutions to do likewise,” they said in the statement.

“We call upon the Paris Club to make their best effort to complete the restructuring of Iraq’s debt before the end of 2004. We urge all non-Paris Club creditors to cooperate,” they added.

The meeting of G-7 economic leaders came after the IMP gave a relative upbeat assessment of the world economy in its World Economic Outlook report released here this week. The report warned, however, the upturn was only fragile and remained exposed to numerous risks.

The G-7 groups Britain, Canada, France, Germany, Italy, Japan and the United States. French Finance Minister Francis Mer did not attend the meeting due to the looming threat of bankruptcy to Alstom, one of France’s top engineering companies.