Finance officials from the world's seven richest nations vowed on Friday to take reforms to combat the current financial crisis that has sent tremors around the globe.
"The global economy continues to face a difficult period. We remain positive about the long-term resilience of our economies, but near-term global economic prospects have weakened," said the finance ministers and central bankers in a joint statement.
"While economic conditions differ in our countries, downside risks to the outlook persist in view of the ongoing weakness in U.S. residential housing markets, stressed global financial market conditions, the international impact of high oil and commodity prices, and consequent inflation pressures," they said.
The International Monetary Fund has warned the U.S. economy will slide into "a mid recession" in 2008 in the face of a major financial crisis.
The global economy is projected to slow to 3.7 percent in 2008,0.5 percentage point lower than at the time of the January World Economic Outlook Update and 1.25 percentage points lower than the growth recorded in 2007.
The largest downward revisions to growth are in the United States, which is now expected to grow at 0.5 percent in 2008. Japan, the world's second-largest economy, is poised to slow to pace of 1.4 percent this year with little improvement at 1.5 percent in 2009.
The officials, representing Britain, Canada, France, Germany, Italy, Japan and the United States also warned that the turmoil in global financial markets remains challenging and "more protracted than we had anticipated."
"We reaffirmed our strong commitment to continue working closely together to restore sustained growth, maintain price stability, and ensure the smooth and orderly functioning of our financial systems," they said in the statement.
The seven richest powers also said that they strongly endorsed a report released from the Financial Stability Forum (FSF), which comprises central bankers and global regulators.
The report calls for tougher capital requirements for banks to ensure they can withstand periods of financial market stress, and urges closer international cooperation between central banks and regulators.
U.S. Treasury Secretary Henry M. Paulson, who hosted the meeting, also vowed that the United States, which was at the epicenter of the crisis, will cooperate with other countries to overcome the current financial crisis.
"International cooperation and coordination has been excellent," he said. "We have worked, and will continue to work, closely to address global challenges and take concrete actions."