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G8 leaders say world economy faces significant risks

(Xinhua)
Updated: 2009-07-09 03:50

L'AQUILA, Italy: Leaders from the Group of Eight (G8) rich countries said on Wednesday that the world economy still faces significant risks despite signs of stabilization.

"While there are signs of stabilization, including a recovery of stock markets, a decline in interest rate spreads, improved business and consumer confidence, the situation remains uncertain and significant risks remain to economic and financial stability," the leaders said in a declaration concluding their first-day meeting at a summit in the central Italian town of L'Aquila.

G8 leaders stand for a family photo (L-R) Japan's Prime Minister Taro Aso , Canada's Prime Minister Stephen Harper, U.S. President Barack Obama, France's President Nicolas Sarkozy, Italy's Prime Minister Silvio Berlusconi, Russia's President Dmitry Medvedev, Germany's Chancellor Angela Merkel, British Prime Minister Gordon Brown and Sweden's Prime Minister Fredrik Reinfeldt during the G8 summit in L'Aquila, Italy July 8, 2009. Leaders from the Group of Eight major industrial nations and the main developing economies will hold talks from July 8-10. [Agencies]

The financial crisis, which broke out last autumn, has dragged the global economy in a deep recession that the world has never seen since the World War II, prompting governments to take unprecedented and concerted action to ensure recovery and repair financial systems.

In a forecast released Wednesday, the International Monetary Fund (IMF) sounded upbeat about a recovery next year, saying global economy is starting to pull out of the recession.

It was estimated that the world economic growth will recover to 2.5 percent in 2010, rather than the 1.9 percent predicted in a previous forecast.

However, the IMF still expects the global economy to contract 1. 4 percent this year, signaling the recovery would be sluggish.

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"The global economy is beginning to pull out of a recession unprecedented in the post-World War II era, but stabilization is uneven and the recovery is expected to be sluggish," the Washington-based institution said.

In face of significant risks, the G8 leaders pledged to take necessary steps, including further stimulus measures, to return the global economy to a strong, stable and sustainable growth path, adding fiscal sustainability in the medium term should also be ensured.

"We will take, individually and collectively, the necessary steps to return the global economy to a strong, stable and sustainable growth path, including continuing to provide macroeconomic stimulus consistent with price stability and medium- term fiscal sustainability," they said.

The leaders also agreed on the need to prepare appropriate " exit strategies" for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured.