G7 considers future in shadow of G20 (1st Lead)

Oct 3, 2009, 14:40 GMT

Istanbul - Finance ministers and central bankers from the world's seven major industrial powers met Saturday to consider the state of the global economy and their own future, after the bloc was relegated to a side role in future global economic talks.

The Group of Seven (G7) nations were coming together on the sidelines of the International Monetary Fund (IMF) and World Bank's annual meetings in Istanbul.

Officials said the meeting will be an opportunity to follow up on the promises of closer cooperation made by leaders of the Group of 20 (G20) at a September 25 summit in Pittsburgh, Pennsylvania.

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 like 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 considered not even putting out an official communique after their meeting, though they apparently changed their minds during the day.

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 are 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 G7 will be considering measures to firm up the recovery, as well as ongoing efforts to achieve far-reaching regulatory reforms that would prevent another collapse of their financial sectors in future.

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.

Finance officials from the US and Europe have sought to assure markets ahead of the meeting that a 'strong dollar' remains in everyone's interest.