Finance ministers from the Group of Seven leading countries have issued a gloomy forecast over the global economy.

The crumbling US housing market and the worldwide credit crunch dominated discussions at the meeting in Tokyo, with the ministers agreeing that conditions may worsen.

While the G7 pledged to act individually and together to promote stability and growth, the US Treasury Secretary, Henry Paulson, admited the current financial turmoil is serious and persisting, but he thinks the world’s largest economy will escape.

“I believe, ok, that’s the word that I’ve used. I believe and I’ve watched this, I’ve been very careful about what I’ve said. I believe we will keep on growing and obviously, if you’re growing, you’re not in recession,” he said.

The recent subprime credit crisis in the United States rattled confidence worldwide, causing pessimism in housing markets.

Aggressive interest rate cuts, led by the American Federal Reserve, hope to kickstart the economy, by persuading shoppers to continue spending.

The G7 is also worried about oil, which recently touched 100 dollars a barrel before slipping back. Ministers urged OPEC to step up production, to keep prices relatively affordable and ward off a damaging slump.

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