ESSEN, Germany (Reuters) — Finance ministers and central bankers from the G7 industrial nations sounded an upbeat note on world economic prospects on Saturday, saying growth had become more balanced and could be around 5 percent this year.The Group of Seven — the US, Canada, Japan, Britain, France, Germany and Italy — said in a statement after a two-day meeting in the German city of Essen that risks to growth from expensive energy and inflation had diminished.

“We are enjoying one of the strongest and most prolonged global expansions in memory,” US Treasury Secretary Henry Paulson said in a statement after the meeting.

In a joint communiqué the G7 said activity in the US economy was solid, though slowing to a more sustainable growth path.

Growth in Canada and Britain was strong and balanced, the upswing in the euro area had an ever larger base and Japan’s recovery was “on track” and would continue, the statement said.

“Amid lower energy prices and moderating inflationary pressures risks have abated, but we will remain vigilant,” the G7 central bank governors and finance ministers said, adding they welcomed China’s plans to boost domestic demand.

But while global inflation risks may have lessened, they were still serious in the now 13 countries using the euro, European Central Bank Governing Council member Mario Draghi said. Markets expect the ECB to rise interest rates in March.

Germany, which holds the rotating G7 presidency and where a rise in value-added tax this year was expected significantly to slow growth, also took an upbeat stance.

“I would like to signal my confidence, not in a play-acting way but quite seriously,” German Finance Minister Peer Steinbrueck told a news conference. Bundesbank head and ECB Governing Council member Axel Weber was equally optimistic.

“We recognised that the global economy continues to grow robustly. Global growth this year is expected at about 5 percent,” he said. Last year the global economy is estimated to have expanded by 5.1 percent but was earlier expected to slow because of less growth in the US and Germany.

Weber said the US economy remained on a “robust expansion path” and that in the euro zone, economic growth would remain above 2 percent in 2007 and 2008. Paulson said, however, that the euro zone and Japan should do more to make global growth more balanced.

“There is still ample scope for both areas to strengthen measures aimed at creating more robust domestic demand,” he said. “Greater flexibility in China’s exchange regime is also needed as part of China’s rebalancing of its economy.”

The US and the euro zone believe larger domestic demand in China would help reduce the country’s huge current account surplus with the rest of the world, and help defuse a potential abrupt adjustment in global exchange rates.

But the chairman of the Eurogroup of finance ministers, Jean-Claude Juncker, said the euro zone was doing its bit to make world growth more balanced.

“The performance of the euro area has contributed to a large extent to a rebalancing of global economic growth,” he said.

In 2006 euro zone growth almost doubled to 2.6 percent thanks to increasing domestic demand.

Japan’s economic expansion slowed to 1.9 percent in 2006-07 from 2.4 percent in 2005-06, but is expected to rebound to 2.0 percent in 2007-08.