The Group of Eight powers wrapped up talks on the global economy yesterday with fresh warnings about the threat from soaring commodity costs but no quick fixes for jittery markets.
The outcome of the summit reflected the lack of firepower in the G8 club of rich nations to fight runaway oil prices, which are pushing up inflation and threatening global economic growth, analysts said.
G8 leaders "agreed on the need to address" rising oil and food prices and global inflationary pressures, they said in a final statement at the end of their three-day summit here.
They again called for a boost to production, refining capacities and investment to increase oil supplies.
The G8 – Britain, Canada, France, Germany, Italy, Japan, Russia and the United States – also held talks with five rising economic powers, including China and India, to seek ways to cool red-hot commodity markets.
The presence of the energy thirsty emerging nations reflects a global economic landscape that has been transformed since the first informal summit of the world's richest countries was held in 1975 after the first oil shock.
With the exception of Russia, the G8 does not include any major oil exporters, giving them little scope to cool red-hot oil prices, while most of the growth in energy demand is coming from booming emerging economies.
The G8 offered little cause for hope that they will be successful in curbing soaring oil prices, said Tomoko Fujii, senior economist at Bank of America in Tokyo.
"But from the very beginning, markets were not expecting much," she said. "It is very difficult for G8 leaders to solve problems such as oil if the important players on that issue are absent from the talks," she said.
"It is having a huge effect in every country in the world," said British Prime Minister Gordon Brown. "We need to recognise this is a global problem."
There is concern that soaring energy costs are contributing to rising food prices, which have sparked protests and even riots in some parts of the world.
The G8 made no mention of the ailing US currency in their joint statements, although French President Nicolas Sarkozy said the leaders were united in their belief that a weak dollar was bad for the global economy.
"There is now clearly a converging view of the economic damage that can be caused by currency imbalances… a dollar that is too low, a yuan that is too low and a euro that is too high," he told reporters.
IMF pessimistic about growth
It is hard to know how far the global financial crisis still has to run, with the extent of further credit losses hinging on what happens to the US housing sector, IMF chief Dominique Strauss-Kahn said yesterday.
"What is sure is that the consequences for the real [economy] sector of the financial crisis are still in front of us," Strauss-Kahn, the International Monetary Fund's managing director, said in an interview.
With sky-high food and oil prices adding to the economic pain caused by financial strains, Strauss-Kahn said the IMF was fairly pessimistic about global growth prospects this year and in 2009.
But he said later that softening growth was less of a threat than inflation. (Reuters)