Specifically addressing the dramatic US slowdown that has raised concerns that the world's largest economy could be slipping into a recession, the ministers urged the US to use both interest rate policies and budget policies - such as tax cuts - to support a rebound in growth.

Both, US treasury secretary Paul O'Neill and Alan Greenspan, the federal reserve chairman, have said that the US economy has ground to almost zero growth. But, following a brace of hefty interest rate cuts in January, both now believe a revival is in the wings.

The G-7 statement recognized that "economic fundamentals remain strong," in the US. For Japan, the statement said that a "modest recovery" is expected, but warned that "downside risks remain." They urged the Bank of Japan (BOJ) to pump more cash into the nation's money supply to stimulate growth.

Japanese Finance Minister Kiichi Miyazawa afterwards said that the final wording of the statement had been modified to take into account Bank of Japan's move on to Friday to cut its official discount rate. "The atmosphere was that the G-7 understands that BOJ made a decision to do the only thing that it could do, and that they hoped that the economy would respond," Mr Miyazawa said.

However, the explicit reference to monetary policy rather than the general terms mentioned last September, suggested that the G-7 regarded it as the key tool for more tinkering. In Europe, "growth prospects remain favorable," due in large part to strong domestic demand in the 12 European Union nations using the euro single currency, the G-7 statement said. The group recommended continued structural reforms - such as loosening rigid labor markets - to enhance "growth potential." Belgian Finance Minister Didier Reynders, representing the euro group nations, said they recognized the dangers of a US slowdown, but insisted Europe was "armed to resist." "The euro area is now perceived as robust," he said. With an eye to new uncertainty about oil prices, the final G-7 statement noted that "lower energy prices and stable oil markets are important" for sustained growth. Although oil prices have dropped from near 10-year highs during the latter part of last year, a surprise attack on Iraqi air defense installations onFriday and commitments by key oil producers to restrain supply has upset forecasts of more stability in the oil market.

The Wall Street Journal