Paulson to tell G8 U.S. growth will speed up

WASHINGTON (Reuters) - The U.S. economy is still feeling the drag from a housing correction, record energy prices and turbulent financial markets, but its growth rate will accelerate by year-end, Treasury Under Secretary David McCormick said on Tuesday.

He said that was the message that Treasury Secretary Henry Paulson will deliver to fellow finance chiefs from the Group of Eight economic powers this weekend in Osaka, Japan, where he said the issue of high food prices will also be on the table.

"Secretary Paulson will tell his G8 colleagues that the housing correction, financial market turmoil and high energy prices continue to weigh on the U.S. economy," McCormick said.

"While we are still working through housing and capital markets issues, and expect to be doing so for some time, we also expect to see a faster pace of U.S. economic growth before the end of the year," he said Paulson will tell the meeting.

McCormick also said the talks would touch on food prices and were likely to focus on progress in meeting humanitarian assistance and efforts to ensure that farmers have access to yield-enhancing inputs for the next harvest, including seeds, pesticides and fertilizers.

"Ministers are ... likely to encourage governments to lift food export restrictions and to redouble efforts to conclude an ambitious Doha (trade) agreement in 2008," McCormick said.

Financial Stability Forum chairman Mario Draghi of Italy is expected to update ministers on the FSF's recommendations to shore up the global financial system, McCormick said, adding the United States was "encouraged by the progress so far in meeting these goals."

He also said financial institutions have raised almost $270 billion in new capital since market turmoil stirred last year, and he expects first-half earnings reports to comply with leading global practices.

At the G8 meeting, Paulson will also seek support for the so-called Clean Technology Fund, which aims to provide financing for the cost differences between newer, cleaner emissions technologies and older, cheaper and dirtier technologies.

The Bush administration has asked the U.S. Congress to contribute $2 billion into the fund.

(Reporting by Glenn Somerville and David Lawder; editing by Gary Crosse)