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G7 financial leaders to meet on European debt woes, recession concerns

09-09-2011 15:54 BJT

by Ounissi Sonia, Zhang Xin

MARSEILLE, France, Sept. 8 (Xinhua) -- The finance and central bank chiefs of the Group of Seven (G7) industrialized nations will meet in southern France on Friday to seek ways able to ease fears over global recession and debt crisis in the eurozone.

In the southern town of Marseille, the financial leaders from the United States, Canada, Japan, Germany, France, Italy and Britain will discuss during the two-day gathering the needed moves to implement structural reforms on monetary policy and fiscal system to bolster governance in the powerful countries.

Moves to breathe life into the economic activities are highly expected to top the G7 conference after August major fall in markets triggered by recession worries, factors of stagnated growth in Europe's leading economies Germany and France, and poor economic data in the United States, the world's largest economy.

Besides, G7 officials are likely to shed more light on the eurozone debt crisis which prompted heavy losses too in world stocks, the worst since 2008 financial downturn following the collapse of Lehman Brothers.

In this context, ministers and banks governors will point to the need of the "golden rule" to help governments avoid potential turmoil by adopting tough measures to tighten public spending and narrow deficit to reach the European Union (EU) financial standards.

Approved by Germany and Spain, the "golden rule" is still discussed in France where several political parties oppose the right-wing leader Nicolas Sarkoy's austerity plan.

On paper, the G7 which struggles to tackle world major issues, is likely to quell markets' fears and regain investors' confidence through series of measures able to boost enough growth and end the volatility in stock exchanges.

In the newly released OECD interim assessment on G7 economies, the advisory agency projected that "the sovereign debt crisis in the euro area could intensify again" and "renewed concerns over balance sheet of banks ... point to possible further tightening of financial conditions."

Urging eurozone governments to implement the regional framework decided on July 21 this year, OECD Deputy Secretary-General and Chief Economist Pier Carlo Padoan underlined the importance of improved regional governance and strengthened bank capitalisation in order to stop contagion and restore market confidence across the eurozone.

On ground, analysts fear a new worthless meeting based on words but not in deeds, a fact which could deepen further tension in world markets.

"This type of meeting rarely comes out with concrete things. The ministers are expected to address messages of confidence to appease investors worries about the economic and financial situation but without announcing specific measures", Jean-Louis Mourier, analyst at BGC Aurel, told Xinhua.

"Such meetings are little bit ambiguous and final statements are not clear enough," he added.

However no prejudgement is deciding in the context that a possible recession looms the market while the decision-makers from the most influential G7, the core-group that faces most of the uncertainties as projected by OECD, is set to discuss solutions.

"Growth is turning out to be much slower than we thought three months ago and the risk of hitting patches of negative growth going forward has gone up," Padoan said when presenting the interim report.

"We are witnessing a growth slowdown across OECD countries," he said, but fortunately the report added that "a downturn of the magnitude of 2008-2009 is not foreseen."

Editor:Wang Xiaomei |Source: Xinhua

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