G-8 has positive outlook despite oil, food prices

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Saying that surging oil prices pose a risk to the world economy, the G-8 leaders urged that production and refining capacities increase in the short term and that investment be boosted over a longer period.

The G-8 the U.S., Britain, Japan, France, Germany, Canada, Russia and Italy also called for diversifying sources of energy and improving energy efficiency.

"We remain positive about the long-term resilience of our economies and future global growth," the leaders said in the statement released on the second day of the G-8's three-day summit in northern Japan.

"However, the world economy is now facing uncertainty and downside risks persist," the statement said.

"We express our strong concern about elevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and increase global inflationary pressure," it said.

The leaders reached no clear consensus on the reasons behind the doubling of oil prices over the last year. Some attributed oil's rise to growing demand and tight supplies and others stressed the role of speculation, according to Yasuo Kodama, the press secretary of Japan's Foreign Ministry.

The G-8 leaders noted in their statement that financial market conditions had improved somewhat in recent months but said "serious strains still exist." There was no discussion of the subprime mortgage crisis in the U.S. that has rattled global markets, Kodama said.

The leaders also pledged to resist protectionist measures and called for the swift conclusion of World Trade Organization talks that have stalled amid bickering between rich and poor nations over how much to cut farm subsidies and other tariffs.

The leaders briefly touched on food security, stressing that Africa's agricultural output was vital, Kodama said. They planned to discuss the subject more in the afternoon.

They also said biofuel production which some have partially blamed for the run-up in oil prices should be conducted in a sustainable manner.