G7 may say global economy not out of trouble: Canada

Wed Apr 22, 2009 1:59pm EDT
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OTTAWA (Reuters) - The Group of Seven leading industrialized nations will signal at a meeting in Washington this weekend that there are glimmers of economic hope but that the global economy is not out of the woods yet, a senior Canadian finance official said on Wednesday.

The official, briefing reporters on condition of anonymity, said people have been frustrated at how long it has taken to isolate toxic assets held by banks around the world -- seen as a precondition for economic recovery.

However, the United States is making some progress in this area and U.S. Treasury Secretary Timothy Geithner will likely update his G7 colleagues on bank stress-testing, the official said.

Canada also expects to hear more from European countries on their efforts to stabilize banks.

The Bank of Canada sounded frustrated on Tuesday when it said "measures to stabilize the global financial system have taken longer than expected to enact," prompting it to mark down its forecasts Canadian economic growth.

But Finance Minister Jim Flaherty issued a hopeful message on Wednesday, saying he detected numerous small signs of encouragement in the global economy.

"The Americans are proceeding with their stress testing of their banking system. That's going to be a major step forward during the month of May. So these are encouraging signs."

He noted expected economic growth in India of 6 percent and resilience in the Chinese economy as other positive signs.

The G7 and G20 finance ministers and central bank chiefs will gather in Washington this week for the spring meetings of the International Monetary Fund and World Bank.   Continued...