Global Finance Leaders Warn of Risk From U.S. Housing Woe

By MARTIN FACKLER
TOKYO — Finance leaders from the world’s wealthiest nations warned Saturday that global economic woes could get worse from the slump in the American housing market, but offered few specific remedies.
In a statement issued after meetings in Tokyo, the finance ministers and central bank chiefs of the Group of 7 industrialized nations offered a more pessimistic view of the global economy than they did four months ago, after their last meeting. They also said the fundamental elements of the global economy remained strong and the United States was likely to avoid recession.
The finance leaders from the United States, Japan, Germany, France, Britain, Italy and Canada warned that global growth could continue to slow as a result of the credit crisis set off by America’s subprime mortgage problems. The statement also pledged joint action to calm shaken financial markets, but it was short on specifics, especially on steps to rekindle growth.
It did not press member nations to pick up the slack from the slowing United States economy by stimulating their own domestic growth. It also did not contain any dramatic joint action, like a coordinated cut in interest rates, as some had hoped.
“The world confronts a more challenging and uncertain environment than when we met last October,” the statement said. “We will continue to watch developments closely and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies.”
Members urged China to absorb more imports by raising the value of its currency, which would make foreign goods cheaper for Chinese consumers. They also called on oil-producing nations to help cut energy prices by raising output. Some warned that higher fuel and food costs could cause global inflation.
Members also said their economies were expected to slow by varying degrees and there was no single fix for global economic troubles. They said they spent much time discussing the severity of housing market troubles in the United States and Washington’s efforts to respond.
The United States Treasury secretary, Henry M. Paulson Jr., said after the meeting that he expected market volatility to continue as investors try to assess the fallout from the housing market problems.
He also said the United States economy would keep growing this year and he was confident of its long-term health.
One concrete step to come out of the meeting was a call for banks to fully disclose their losses from the subprime meltdown and quickly rebuild their balance sheets. The German finance minister, Peer Steinbrück, said members agreed that write-offs at banks related to subprime mortgages could reach $400 billion, about four times estimates just a couple of months ago.