Fast-growing emerging-market powers, untainted by the reckless lending that has tripped up many rich countries, want their growing economic might recognised with more clout in global councils.

While finance officials from Group of Seven industrialised nations spent the weekend assessing the harm their economies face from a credit crunch sparked by rising defaults in the US subprime mortgage market, up-and-coming nations were quick to highlight their own cleaner prospects.

"The irony of this situation: countries that were references of good governance, of standards and codes for the financial system, these are the very countries that are facing serious problems of financial fragility putting at risk the prosperity of the world economy," observed Brazilian Finance Minister Guido Mantega.

Mantega, who takes over chairing the Group of 20 emerging countries in November, was set to meet with US Treasury Secretary Henry Paulson yesterday and has said he will push for more representation for the emerging economies, and not just in global institutions, such as the IMF and World Bank.

Mantega would like to see the exclusive G7 club expanded to give emerging powers a greater voice, a recurring theme this weekend as the IMF debated how to allocate voting rights.

The strains in global credit markets left finance ministers from the G7 — the United States, Britain, Canada, France, Germany, Italy and Japan — in the uneasy situation of trying to put the best face on a bad situation, while acknowledging the global economy needed the support that countries like Brazil, China, India and South Africa were now offering.

"Recent financial market turbulence, high oil prices and weakness in the US housing markets" will hurt growth, a G7 communique said. "(But) our overall economic fundamentals continue to be strong and emerging markets are providing critical impetus to the strength of the world economy."

The difference between IMF estimates for sub-par US growth of 1.9 percent this year and next and a forecast for China of double-digit rates of 11.5 percent this year and 10 percent in 2008 was stark.

Paulson said the impact from rising foreclosures on US subprime mortgage loans to less creditworthy borrowers will be longer-lasting than he first thought. It is "the biggest risk" the US economy faces, he said.

Many of these loans were repackaged as securities and sold to investors around the globe. Their souring has touched off tighter credit conditions that threaten to slow global growth.

It has also left emerging economies in a stronger position to leverage their relative strength into demands for more say in institutions like the IMF and World Bank, and G7 officials concede they deserve more recognition for their rising might.

Some regions have so far escaped much of the hit from credit problems and, not surprisingly, they are mostly in emerging markets. US Treasury Assistant Secretary Clay Lowery said on Saturday, after a meeting between Paulson and six Latin American countries, that they were unscathed by the turmoil.

The six — Mexico, Chile, Colombia, Argentina, Peru and Uruguay — were benefiting from sound economic policies that have kept debt under control and strengthened capital markets, said Lowery, who was asked whether it meant they had "arrived" as economic powers.

"It's never safe to say that anyone's arrived. I would say that the United States still needs to arrive at times," Lowery replied, a classic understatement of the challenge the world's biggest economy now faces as it tries to regain its balance. – Reuters