Finance ministers and central bankers from the

Group of Seven

industrialized nations said today that although global growth this year "is likely to be somewhat slower than we expected when we last met," the basic factors supporting sustained growth in many of the major industrial economies remain in place.

According to a statement released by the G7, whose members are meeting in Palermo, Italy, finance chiefs from the world's richest nations agreed on the need for both macroeconomic and structural policies among the member countries to support growth, adding that "in this context, lower energy prices and stable oil markets are important."

The G7, which is made up of the

U.S.

,

Canada

,

France

,

Germany

,

Italy

,

Japan

and the

United Kingdom

, said that in the United States, economic growth has slowed, though economic fundamentals remain strong. "Monetary and fiscal policies should aim at supporting sustained growth, while preserving budgetary restraint and price stability and increasing national saving over the medium term," the statement said.

The statement said in the United Kingdom and Canada, "growth remains healthy and unemployment is low, with some signs of a temporary slowing in economic growth. Policies should continue to sustain growth and employment over the medium term, while meeting inflation targets."

In the euro area, growth prospects remain favorable, thanks to strong domestic demand. "Policies should be directed at enhancing growth potential, through continued coordinated reform efforts aimed at increasing product and labor market efficiency. Tax reforms are being implemented while pursuing fiscal consolidation. In view of Europe's aging population, budgets and social security systems need to be further strengthened." The G7 also said a modest recovery is expected in Japan, even though prices continue to decline and downside risks remain.

The member nations also reiterated their belief that "exchange rates among major currencies should reflect economic fundamentals. We will continue to monitor developments closely and to cooperate in exchange markets as appropriate."

G7 ministers agreed that after two years of recovery, "the outlook for emerging market economies has become more mixed." The members said "we welcome the substantial progress achieved in emerging Asia to reduce vulnerabilities, including the improvement of the external debt structure in the crisis-affected countries, and the adoption of more sustainable exchange rate regimes." To secure future growth, the G7 said "the necessary reforms" must be pursued in the financial and corporate sectors. In Latin America, "sound macroeconomic and structural policies are needed to help reduce vulnerabilities."

The nations also said that while they "welcome the recent improvements in the macroeconomic and balance of payments situation of the Russian economy," they urged the Russian authorities "to step up the process of economic reforms and meet in full their financial obligations in order to restore promptly normal relations with the international financial community."