Leaders of the Group of Eight (G8) summit meeting being held in the Italian central city of L'Aquila said that the world economy still faces significant risks despite signs of stabilisation.

“While there are signs of stabilisation, including a recovery of stock markets, a decline in interest rate spreads, improved business and consumer confidence, the situation remains uncertain and significant risks remain to economic and financial stability,” the leaders said in a declaration concluding their first-day meeting on July 8.

The financial crisis, which broke out last autumn, has dragged the global economy in a deep recession.

In a forecast released the same day, the International Monetary Fund (IMF) said global economy is starting to pull out of the recession and the world economic growth will recover to 2.5 percent in 2010, rather than the 1.9 percent predicted in a previous forecast.

However, the IMF still expects the global economy to contract 1.4 percent this year, signaling the recovery would be sluggish.

In face of significant risks, the G8 leaders pledged to take necessary steps, including further stimulus measures, to return the global economy to a strong, stable and sustainable growth path, adding fiscal sustainability in the medium term should also be ensured.

During the first working day, besides economic issues, G8 leaders also discussed current hot issues, including the recent missle fires by the Democratic People’s Republic of Korea , post-election situation in Iran and the country’s controversial nuclear programme.

After the first meeting on July 8, G8 meetings will be expanded to include the Group of Five emerging economies of Brasil, China, India, Mexico and South Africa plus Egypt on July 9.

The G8 groups Britain, Canada, France, Germany, Italy, Japan, Russia and the United States./.