G7 offers hope crisis is easing

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Financial chiefs from the G7 have said there are signs the contraction in the global economy may have eased, but warned this did not signal a recovery.

The world economy shows "some signs of stabilisation", finance ministers and central bank governors from the G7 said after meeting in Washington.

Although the G7 expects economic activity to begin to recover later this year, it said risks still persist.

The IMF has predicted the global economy will shrink by 1.3% in 2009.

The G7 also said it would continue to act to restore lending, and to ensure the soundness of financial institutions.

"Recent data suggest that the pace of decline in our economies has slowed and some signs of stabilisation are emerging," it said in its communiqué.

However, speaking after the meeting, US Treasury Secretary Timothy Geithner warned "we are not close to emerging from the darkness".

The G7 comprises the US, the UK, Japan, Germany, France, Italy and Canada.

Weekend meetings

Later, financial chiefs from the G20 will also meet, a day before the spring summits of the World Bank and the International Monetary Fund.

World leaders signed a deal to tackle the crisis with measures worth $1 trillion (£681bn) on 2 April.

At the London meeting three weeks ago, the G20 agreed to triple the resources available to the IMF to $750bn.

That included a $500bn emergency lending facility, with the European Union (EU), Japan and the US each pledging $100bn towards it.

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At Friday's meetings the US is expected to be pressed to sign off on its contribution.

Ministers will also discuss plans on how quickly any restructuring of the IMF can take place, as well as plans to reform the financial system, although they are expected to focus more on national reforms rather than international.

Timothy Geithner said the meetings would offer "a good chance to follow up" on the decisions made at the London summit.

However, the World Bank has accused the US, the EU and other G20 members of going against one of the pledges made at the summit.

It has named several countries it says have carried out protectionist measures, despite the G20 agreeing cuts to trade barriers.