G-7 leaders pledge co-ordinated effort to tackle economic crisis

Finance ministers and central bank governors from G-7 countries have pledged to provide an internationally co-ordinated response to the global economic slowdown experienced in recent months.

In a statement released on Friday following a meeting between G-7 leaders in Marseille, France, finance ministers and central bank governors from France, Germany, Italy, Japan, UK, US and Canada said the heightened tensions experienced in financial markets reflected significant challenges to growth, fiscal deficits and sovereign debt, stemming from past accumulated imbalances.

It said the seven nations were taking strong actions to maintain financial stability, restore confidence and support growth, in their respective countries but that concerns over the pace and future of the recovery underscored the need for a "concerted effort" at a global level.

The statement said that while fiscal policy faced a "delicate balancing act" in light of the fragile nature of the recovery, central banks would stand ready to provide liquidity to banks as required and reaffirmed their commitment to implement fully Basel III, taking all "necessary actions" to ensure the resilience of banking systems and financial markets.

The recovery in advanced economies slowed in the first half of 2011, led by the US which grew by only 1.4% in the first two quarters of the year, compared with 4.8% in the previous two quarters. Meanwhile, growth in Europe has also flat-lined with the UK recording a 0.2% increase in GDP during the second quarter, compared to growth of only 0.1% in Germany and no growth in France. Meanwhile, Japan's economy contracted by 0.5% during the second quarter as a result of supply-side constraints linked to the earthquake disaster.

The slump in global demand and uncertainty created by on-going sovereign debt crises in Europe has led to declining confidence in global markets, with the largest equity indices in New York Frankfurt and London all reporting major losses. A number of central bank governors including Gill Marcus from South African Reserve Bank and Agustín Carstens from the Bank of Mexico, have been critical of advanced economies' failure to provide a coordinated response to the challenges that face the global economy.