G7 finance ministers to address faltering global growth

Sun May 24, 2015 7:44am EDT
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By Jonathan Cable

LONDON (Reuters) - Finance ministers from the world's largest developed economies meet in Germany this week against a backdrop of faltering global growth, scant inflationary pressures and a bond market in turmoil.

High on their agenda -- even if unofficially -- will be Greece and how it can stay in the troubled euro zone. Figures due on Friday from the United States that will almost certainly show the world's biggest economy contracted last quarter are also likely to feature.

"With the negotiations between Greece and the rest of the euro area at an impasse, an impatient German Chancellor Merkel has warned that an agreement must be reached before the end of the month," said Thomas Costerg, senior economist at Standard Chartered.

Greece cannot make a payment to the International Monetary Fund due on June 5 unless foreign lenders disburse more aid, a senior ruling party lawmaker said on Wednesday, the latest warning from Athens it is on the verge of default.

Analysts largely agree the country's cash squeeze is increasingly acute and fresh aid will be needed sooner or later to avoid bankruptcy.

Merkel and French President Francois Hollande held talks on Thursday with Greek Prime Minister Alexis Tsipras on the sidelines of a European Union summit in Riga, hoping to speed the resolution of Athens' debt crisis.

With business growth slowing in the euro zone and factory activity contracting again in China, market watchers have been looking to the United States to drive a pick-up in growth.

But a preliminary Reuters poll last week predicted that adjusted first quarter U.S. GDP numbers USGDPP=ECI due on Friday would be massively revised down and show a 0.7 percent contraction in the first three months of this year.   Continued...

French Finance Minister Michel Sapin listens to German counterpart Wolfgang Schaeuble (R) during an European Union finance ministers meeting in Brussels, Belgium, May 12, 2015.   REUTERS/Francois Lenoir