ISTANBUL, Oct 3 – Finance chiefs from the Group of Seven richest world economies gathered in Istanbul on Saturday for talks on the economic crisis as doubts swirled about the health of the global economy.
The meeting in Turkey\’s biggest city comes after the United States — the world\’s biggest economy — reported higher than expected unemployment figures and a setback in the recovery of its battered manufacturing sector.
US President Barack Obama on Friday said the job losses were "a sobering reminder that progress comes in fits and starts."
"We\’re going to need to grind out this recovery step by step," he added.
In a blow to hopes of imminent recovery, official US data showed job losses accelerated to 263,000 in September, pushing the unemployment rate to a new 26-year high of 9.8 percent amid the worst global recession since World War II.
The IMF has said that a tentative global economic recovery has begun but has also warned that the economic crisis is not yet over as the financial sector remains weak and unemployment in many countries continues to rise.
Europe meanwhile put pressure on the United States to support a weak dollar.
"Everyone needs a strong dollar," French Finance Minister Christine Lagarde said on Friday ahead of the G7 talks taking place in the run-up to annual meetings of the International Monetary Fund and World Bank on Tuesday and Wednesday in Istanbul.
The G7 finance chiefs were to discuss "the next steps and implementation" of a roadmap agreed at the G20 summit last week for recovery from the worst recession since World War II, a US Treasury official said earlier.
Signs of recovery have pushed down the value of the dollar, which is traditionally seen on currency markets as a safe haven in tough economic times and whose status as the world\’s main reserve currency has been questioned.
The dollar was trading at 1.4572 to the euro in New York late on Friday.
The current state of the dollar has led some experts to conclude that Washington is allowing the currency to lose value as a way of boosting US exports by making them cheaper — a tactic that would weaken European exports.
US Treasury Secretary Timothy Geithner has sought to dampen these fears, saying recently that "a strong dollar is very important" to the US economy.
"Excessive volatility and disorderly movement in exchange rates has adverse implications for economic and financial stability," European Central Bank chief Jean-Claude Trichet warned earlier this week.
Trichet is set to attend the Istanbul talks, along with finance ministers and central bank governors from the G7 members: Britain, Canada, France, Germany, Italy, Japan and the United States.
This grouping of rich global economies has now been eclipsed by the G20 which includes major emerging markets such as Brazil, China, India and Russia.
Leaders at a G20 summit in the US city of Pittsburgh last week agreed the wider grouping was the main forum for international economic cooperation.
Stressing the decline of the G7, IMF managing director Dominique Strauss-Kahn disparaged the group in an interview on Friday.
"The old G7 — I was about to say the late G7," the former French Socialist finance minister told news television network France 24.
G7 meetings were "a bit without substance" and "floating in the clouds with communiques which no longer interest anyone," he added.
The US Treasury official however said the G7 remained "a valuable format for finance ministers" by bringing together "the largest creditors in the system."
Though the meeting on Saturday is of the G7, Russian Finance Minister Alexei Kudrin is expected to participate. The G7 meeting will also be the first for the new Japanese finance minister, Hirohisa Fujii.