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U.S. official upbeat about economy

Treasury secretary assures G-7 that growth is coming

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ROME — An upbeat U.S. Treasury Secretary Paul O'Neill insisted that the gloomy global economy is poised for a rebound, telling his counterparts from the world's richest countries Saturday that people must have "some perspective" about growth.

Gathering in a Renaissance villa on a hilltop overlooking Rome, the finance ministers hammered out broad plans to revive the economy — and downplayed dismal economic data.

"Higher is better, but this is not terrible," O'Neill assured his colleagues at the one-day Group of Seven, or G-7, meeting. "There is some perspective required here as to where we are."

The faltering U.S. economy should climb to growth rates above 2 percent in the fourth quarter of this year and above 3 percent next year, O'Neill predicted.

The optimistic forecast contrasts with that of many economists who expect U.S. growth for the just-completed second quarter to come in below the first quarter's 1.2 percent rate.

But O'Neill pointed to a list of recent economic figures that indicate the U.S. economy could be headed for a turnaround, including record car and truck sales, high levels of home buying and relatively low unemployment.

The U.S. economy, which is a major motor of global growth, will also get a boost from the Bush administration's $1.35 trillion tax cut and a series of interest rate reductions by the U.S. Federal Reserve.

"The corrections that are taking place in the U.S. economy are putting us on a footing that will put us to higher rates of real growth fairly soon," O'Neill said.

O'Neill declined to comment on whether Japan and Europe were doing enough to combat the global slowdown, saying: "We're not here to throw rocks at each other."

At the gathering, the top finance officials from the United States, Japan, Germany, France, Britain, Italy and Canada were preparing the economics agenda for a July 20-22 summit of G-8 leaders in the northern Italian city of Genoa.

Russian officials were also there for bilateral talks on the sidelines of the main event.

The G-7 ministers generally agreed that the global economy had slowed down more than expected, but remained confident that sound economic fundamentals and strong international cooperation could fuel renewed expansion.

Among measures recommended by the ministers to bolster growth was a plan for economists to go through their countries region by region, identifying structural obstacles to growth there.

The ministers also recommended launching a new round of World Trade Organization negotiations to open more borders to free trade, another action that could boost growth.

To further shore up the economy, the ministers agreed to strengthen the international financial system, liberalize access to capital markets and discuss restructuring debt relief.

Japan's economic reform plans won high marks from the assembled ministers, with O'Neill winning a commitment from Japanese Finance Minister Masajuro Shiokawa that they will be in motion by this autumn. The Japanese economy shrank at an annual rate of 0.8 percent in the first quarter.

The Japanese government has pledged to tackle a number of thorny issues, including measures to help banks write off huge sums of soured loans and steps to rein in wasteful public spending.

The European Union was also optimistic, despite Germany and France — the region's biggest economies — slashing growth forecasts in recent months.

"The slowdown is sharper than we envisaged," EU Monetary Affairs Commissioner Pedro Solbes said. "But European growth figures are higher than those of the U.S. and Japan."

EU economic growth is expected to come in between 2 and 2.5 percent this year, Solbes said, adding that various tax cut policies in some EU countries will help growth rates as well as stricter government spending.

Earlier in the day, however, German Finance Minister Hans Eichel, stressed the euro zone's dependence on a quick U.S. rebound.