Their gathering in the Japanese city of Niigata came as worries over a US default fuelled uncertainty over the global outlook, already clouded by stubbornly high inflation and US bank failures.
“The global economy has shown resilience against multiple shocks, including the Covid-19 pandemic, Russia’s war of aggression against Ukraine, and associated inflationary pressures,” the leaders said in a communique after the meeting.
“We need to remain vigilant and stay agile and flexible in our macroeconomic policy amid heightened uncertainty about the global economic outlook.”
The communique made no mention of the US debt ceiling stalemate, which hits markets at a time when borrowing costs are rising because of aggressive monetary tightening by US and European central banks.
US treasury secretary Janet Yellen said yesterday she would meet senior Wall Street bankers next week about the possibility that Washington could default on its debt for the first time since 1789.
“Clearly, distress in the world’s biggest economy would be negative for everyone,” World Bank president David Malpass told Reuters on the sidelines of the G7 meeting the same day.
“The repercussions would be bad to not get it done.”
On the banking troubles, the communique said policymakers would tackle “data, supervisory, and regulatory gaps in the banking system”.
They retained their April assessment that the global financial system was “resilient”, thanks to regulatory reforms made after the 2008 global financial crisis.
Warning that inflation remains “elevated”, the G7 central banks stressed their commitment to price stability and ensure inflation expectations remained well-anchored, the communique showed.
The grouping reiterated its condemnation of Russia’s invasion of Ukraine and pledge to strengthen monitoring of cross-border transactions between Russia and other countries.
China has also been much on the leaders’ minds, with this year’s chair, Japan, spearheading efforts to diversify supply chains and reduce their heavy reliance on the world’s second-biggest economy.
The G7 finance leaders set a year-end deadline for launching a new scheme to diversify global supply chains in their communique.
The new scheme envisages the G7 offering aid to low and middle-income countries so that they can play a bigger role in supply chains for energy-related products, such as by refining minerals and processing manufacturing parts.