The Group of Seven financial chiefs who met in Tokyo last week recognized that the global economy "confronts a more challenging and uncertain environment" than when they last met in October. Their statement said, "In all our economies, to varying degrees, growth is expected to slow somewhat in the short term, reflecting wider global economic and financial developments." Their common assessment of the current economic situation can serve as the starting point for financial and fiscal policies that the G7 countries will take respectively.
Market players had been watching whether the G7 financial chiefs would come up with concrete measures at the meeting to cope with fears of a credit crunch and economic slowdown as a result of the United States' subprime mortgage crisis. They said they "will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies." But to the disappointment of market players, the financial chiefs failed to spell out concrete joint measures that the G7 countries could implement — such as easing credit and adopting fiscal stimulus packages.
This is because each G7 country's economic situation is different, including the degree of impact of the subprime loan crisis, and because it is difficult to foresee the overall extent of financial losses from the crisis. The difficulty in determining losses from the crisis is due to the complicated securitization of debts.