The world economy remains vulnerable to downside risks stemming from tighter credit, a deterioration of the US housing market, higher oil prices and rising inflation, according to G7 finance ministers gathering in Tokyo on Saturday.

Although “long-term fundamentals remain sound” and recession in the US and elsewhere could be avoided, according to the final communiqué, the world’s richest nations said they stood ready to “take appropriate actions, individually and collectively, in order to secure stability and growth”.