To give readers a sense of their importance, the words "Group of Eight" are usually followed by "leading", "richest", "largest" or "most important" economies in the world. In 2008, the G8 must learn to live with a new world order.

Its economic problems - and there are quite a few - will occupy more time for leaders at the summit than desired. And it is all the direct result of the G8's dwindling importance in the global economy.

Asian domestic savings, following the region's financial crisis a decade ago, encouraged the US and other rich countries to boost household borrowing and spending, contributing to the past year's credit crunch.

Yet the rich-country slowdown has not eased the pressure on the world's resources. Emerging-market demand for oil, food and commodities is contributing to inflationary pressures around the world as food prices soar and oil prices have hit $140 a barrel.

The G8 is now buffeted by forces and policies from elsewhere; it is no longer the master of its own destiny.

While the G8 accounts for almost half the world's economic output, developing and emerging economies produce 70 per cent of economic growth. Their dynamism outweighs the G8's size. And by dint of its 10 per cent growth rates, China alone contributes as much to the world's economic growth every year as the US.

This change in the balance of world economic power has profound implications for the G8.

It is facing a nasty squeeze. Its economies were already slowing in response to the credit crisis, but now must also deal with higher prices, putting further strain on consumers who had come to believe mistakenly that globalisation and cheap imports go hand in hand.

But as the G8 summit gets under way, not all the recent economic developments have been bad.

Compared with the fears in March and April, the worst of the credit crisis appears over. Dire predictions of deep recessions on the back of a system-wide failure of the banking sector have disappeared; financial institutions have raised capital and financial markets have become more stable.

The International Monetary Fund no longer thinks that the US economy will contract in 2008, as it thought in April, and Mario Draghi, the governor of the Bank of Italy and chairman of the global Financial Stability Forum, said at last month's meeting of G8 finance ministers: "It looks unlikely that banks will now have implications for the real economy."

But as Mr Draghi added, the financial sector is not safe yet. "Risks to the real economy come from the real economy itself... and they may impinge on financial services," he said.

While the threat of imminent destruction of wealth from a financial sector implosion is diminished, the danger of a deep slowdown still hangs over rich countries. It now comes from the supply shocks to food and fuel prices, which are hitting household incomes.

Mervyn King, the governor of the Bank of England, warned families to prepare for and accept "a loss of real purchasing power". Jean Claude Trichet, the European Central Bank president, put his organisation on a state of "heightened alertness" to raise interest rates if evidence mounted that Europeans were beginning to think and act as if 3 or 4 per cent inflation was normal. In recent speeches, Ben Bernanke, the Federal Reserve chairman, has warned as much about rising inflation as about stalling growth.

The difficulty for G8 officials is that there is little they can do about any of the new problems facing their economies except warn that the period ahead will not be pleasant. With most believing rising food and energy prices depend on fundamental forces of global supply - which is reaching short-term capacity limits - and still-buoyant demand, there is little benefit in pretending that summit declarations can have much effect.

Of course, many of the problems will be mitigated by market forces. Asia's high growth rates and efforts to maintain competitive currencies are raising inflation in the world's most populous region more than elsewhere. In time, that will serve as an appreciation in the real value of Asian currencies and wages, reducing the region's competitiveness and stemming growth.

It will not be as rapid as a freely floating currency regime can be in eliminating imbalances and it will impose hardships on many of the poorest in Asia.

But, in the meantime, the leaders of the G8 will have to sit and watch as their citizens face higher prices in supermarkets and at fuel pumps.

For already unpopular leaders - George W. Bush of the US, Gordon Brown of the UK, Nicolas Sarkozy of France, and Yasuo Fukuda of Japan - the period will be uncomfortable.

And consumers in G8 countries, so used to their goods being made in China, will have to get used to global economics and prices set there too.