World's most powerful democracies discuss how to help growth

Staff Writer
Columbus CEO

DRESDEN, Germany (AP) — Top finance officials from the Group of Seven wealthy democracies are gathering in Germany this week to discuss ways to strengthen the global economy.

U.S. officials are pressing countries such as Germany that have strong finances to invest more to stimulate their economies. They're urging European leaders to find a solution to Greece's financial problems and will seek ways to cut off financing for extremist organizations such as the Islamic State group.

Ahead of the meeting, activists urging more help for poor countries floated large balloons bearing the faces of government leaders next to Dresden's historic Frauenkirche, or Church of Our Lady, urging the meeting to produce more than "hot air."

The Group of Seven, or G-7, meets against the background of a recovering global economy that faces risks on a number of fronts:

-Turmoil in the Middle East and Russia's pressure on Ukraine are potential risks to growth.

-The economies of Europe and the United States are growing, but not as quickly as hoped. The jobless rate remains high in Europe.

-The U.S. Federal Reserve is weighing whether to start raising interest rates from levels near zero. Fed chair Janet Yellen has said she expects a rate hike this year. The impact of a hike on financial markets long used to cheap money remains unclear.

-Greece's struggle to reach a new bailout deal with creditors is likely to come up, even though the country is not a member of the G-7. Creditors like Germany have insisted Greece must commit to controlling spending and reform its economy before it gets more money; U.S. officials don't want a Greek default and possible chaotic exit from the shared euro currency to roil markets as the economy is getting going.

Officials from host country Germany, which has the rotating leadership of the G-7, said the meeting over three days through Friday was envisioned as a relaxed discussion forum to set up decisions and positions to be taken at a June 7-8 summit of heads of state and government at the Schloss Elmau resort outside Munich.

The finance officials were to meet over dinner Wednesday evening. The first formal working sessions were scheduled for Thursday.

The United States, represented by Treasury Secretary Jacob Lew, has pressed for countries running trade and budget surpluses to do more to stimulate economic demand. Germany, which is running a large trade surplus and has balanced its budget, has firmly resisted calls to relax its budget discipline, saying avoiding new debt is the prudent course.

The group once dominated global discussion of trade and economics but has seen some of its importance wane as new global players such as China, India and Brazil have become richer and more influential. They are represented in the Group of 20, which includes countries with about 80 percent of the global economy.

The Group of Seven, or G-7, includes: Britain, Canada, France, Germany, Japan, Italy, and the United States. Russia was thrown out last year over its role in the conflict in Ukraine.