G7 Finance Ministers Warn on Debt and Bond Market Turmoil Amid Iran Conflict

Finance ministers and central bank chiefs from the G7 nations have gathered in France on Monday for the two-day deliberations over rising public debt, volatile bond markets and the global economic fallout due to disruption in energy and supply chains following Iran war.

The two-day meeting in Evian is being held under the rotating G7 presidency and comes as investors fear higher energy prices could fuel inflation and trigger further interest rate hikes globally.

The summit will also address terrorism financing and the supply of critical minerals, US Treasury Secretary Scott Bessent said.

“We’re here to discuss the global economy, global imbalances, critical minerals and terror financing,” Bessent told reporters ahead of the meeting.

Finance ministers and central bank officials from the United States, United Kingdom, Canada, France, Germany, Italy and Japan are attending the two-day gathering.

France is hoping that the deliberations may produce at least a common understanding of the challenges facing the global economy.

“The way the global economy has evolved over the past decade is clearly unsustainable,” French Economy and Finance Minister Roland Lescure said, citing America’s large budget deficit, Europe’s weak innovation performance, and sluggish Chinese consumption alongside industrial overcapacity.

As per the France media reports, the officials said that the agenda of the meeting is “dialogue,” knowing that divisions among members exist and remain significant.

“I want to show that multilateralism can work,” Lescure said. “But the discussions are not easy. We do not agree on everything, including with our American partners.”

Trade and public debt remain one of the most contentious issues after Washington imposed new 15 per cent tariff surcharges earlier this year.

The talks also come shortly after Donald Trump visits Beijing, the first by a US president since 2017, amid rising concerns in Western capitals about dependence on China for rare earths and other strategic minerals essential for batteries, electronics, and defense systems.

The main objective of the G7 countries, as per Lescure, is to ensure that no single country remains dependent on any single country for rare earth supplies, considering the fact that China, which dominates the extraction and processing of such materials, has previously restricted exports or used its market position to influence prices.

The meeting, which also includes representatives from G7 central banks, will examine how governments can coordinate responses to economic shocks such as inflation using temporary, targeted, and reversible measures, according to the French finance ministry.

German central bank chief Joachim Nagel said policymakers could still take steps to calm markets and restore confidence.

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