Saturday, September 16 2006 13:12 Hrs (IST) - World Time -

Singapore: Finance ministers from the world's leading Group of Seven (G7) industrialised nations opened day-long talks today (Sept 16, 2006) amid rising concern over signs of a US economic slowdown and its impact on the global economy. Ministers from Britain, Canada, France, Germany, Italy, Japan and the US are also expected to call for urgent moves to revive the crippled world trade talks. The Doha negotiations, launched in November 2001, were suspended in July amid bitter transatlantic quarrels over farm sector liberalisation. Economists say failure to inject new life into the talks heightens risks of a global economic slowdown.

The focus at the G7 meeting is also on China, with Beijing under increasing pressure to further ease controls on the yuan.

Critics in the US and the European Union say a cheap yuan is allowing China to flood world markets with low-cost goods, fuelling demands for protectionist action. The threat of a disorderly unwinding of global economic imbalances - a reference to the huge US current account and budget deficit compared with large export-led surpluses in China and other Asian countries - is also on the agenda. "The risk is that if nothing is done, imbalances will not be reduced gradually, but suddenly, and in a disruptive way," IMF managing director Rodrigo Rato warned last week. The IMF has invited the US, China, Japan, Saudi Arabia and the 12-nation euro zone countries to take part in the discussions. The G7 meeting comes only a day after the IMF said the world economy is currently performing better than expected, with growth of 5.1 percent forecast for this year.

IMF chief economist Raghuram Rajan has warned that IMF predictions are surrounded by more uncertainty than usual, with risks tilted to the downside. The G7 meeting takes place ahead of the annual gathering of the World Bank and the IMF next week, which will also discuss the health the global economy in the face of higher inflation, further increases in oil prices and the fall-out from the failed Doha talks.