WASHINGTON : Global finance chiefs gather this week with the impact of US housing and credit woes spreading worldwide, exchange rate tensions rising and new agendas being carved out at the IMF and World Bank.

Meetings of the Group of Seven finance ministers followed by annual gatherings of the International Monetary Fund and World Bank are being held against a backdrop of slowing global growth, but comments from key leaders suggest there is no reason to panic.

IMF officials nonetheless have said they expect to lower their forecast for global economic growth as well as estimates for major economies including the United States and the eurozone.

Sources said that the IMF's World Economic Outlook would lower its global forecast to 4.8 percent growth from a previous estimate of 5.2 percent.

The IMF's outgoing head Rodrigo Rato said in an interview with the Financial Times that the global credit squeeze that began with sub-prime US housing failures may not be over.

"Problems are going to come to the real sector, come to (government) budgets - that is something we keep telling people," he said.

Rato said that it would be "a few months, probably into next year" before the availability of credit returned to normal levels in the markets, which was "going to have an impact on growth".

"The US is going to slow down...Growth in Europe looks less strong than before, and in Japan too," said Rato, who will be succeeded as IMF chief by former French finance minister Dominique Strauss-Kahn at the end of the month.

Other than the impact of the credit squeeze, some finance chiefs are worried that the weak dollar and strong euro will end up hurting a number of economies.

"On balance there is plenty of reason to think that European growth is going to slow and that the euro itself has a very limited upside," said Robert Brusca at FAO Economics.

"No matter where they go, (eurozone) exports will not be able to escape the threat from lower priced goods abroad," Brusca added.

While European economies may feel the pinch from slower exports, Japan's low interest rates will fuel further the "carry trade" that puts more pressure on exchange rates.

John Lonski, chief economist at Moody's Investors Service, said a rise of the euro above US$1.50 would be a "shock" but probably manageable.

Of more concern would be a loss of confidence in the US dollar that could send tremors across a fragile global financial system, he noted.

This suggests the G7 will use much of their time discussing interest rates, following the Federal Reserve's half-point cut on September 18 and expectations running high for a boost in rates by the European Central Bank.

Lonski said central banks would hope to avert a further pummelling of the US dollar.

"I don't think that other central banks would allow the US dollar to collapse," he said.

"It's not in the interest of the world economy to allow the US dollar to enter a downward spiral." - AFP/ch