G7 finance chiefs see growing risks to global economy

Top world finance ministers warned that the global economy faces growing threats from a US housing slump and credit crunch, urging banks to come clean on their subprime loan losses.

The finance chiefs from the Group of Seven industrialised nations said their economies were set to lose steam in the near future but remained fundamentally solid, according to a draft statement from a meeting here today.

"In all our economies, to varying degrees, growth is expected to slow somewhat in the short-term, reflecting wider global economic and financial developments," according to the statement obtained by AFP.

The US economy faces growing risks with the potential for a further deterioration in the housing sector, according to the draft.

"In the United States, output and employment growth have slowed considerably and risks have become more skewed to the downside," said the G7, which groups Britain, Canada, France, Germany, Italy, Japan and the United States.

The ministers warned that global growth may be curbed by a further deterioration of the US housing market, tighter credit, high oil and commodity prices and growing inflationary pressures.

A US housing slump, led by rising mortgage defaults among "subprime" or high-risk customers, has triggered a credit crunch that has wreaked havoc on world markets in recent months.

The finance ministers urged "prompt and full disclosure by financial institutions of their losses" from the US subprime crisis.