U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have Canada and the United States both rely heavily on international trade and foreign investment for economic growth, and are both major producers of commodities. Because of the fact that they share these attributes, they also share a keen interest in the health of the global economy. So it is extremely important for both countries to focus on how events in the international arena unfold.

Over the past few years, there has been a strong expansion of the global economy. Indeed, the rate of expansion has exceeded the growth rate of global potential output. This strong growth has led to higher prices for many of the primary commodities that North America produces. In turn, this has meant an improvement in terms of trade and rising national incomes in both countries.

This global growth has been rooted primarily in the economic strength of the United States and, by reflection, of Canada. Specifically with regard to the U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have c

o share a keen interest in the health of the global economy. So it is extremely important for both countries to focus on how events in the international arena unfold.

Over the past few years, there has been a strong expansion of the global economy. Indeed, the rate of expansion has exceeded the growth rate of global potential output. This strong growth has led to higher prices for many of the primary commodities that North America produces. In turn, this has meant an improvement in terms of trade and rising national incomes in both countries.

This global growth has been rooted primarily in the economic strength of the United States and, by reflection, of Canada. Specifically with regard to the U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have

global economy. Indeed, the rate of expansion has exceeded the growth rate of global potential output. This strong growth has led to higher prices for many of the primary commodities that North America produces. In turn, this has meant an improvement in terms of trade and rising national incomes in both countries.

This global growth has been rooted primarily in the economic strength of the United States and, by reflection, of Canada. Specifically with regard to the U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have

n improvement in terms of trade and rising national incomes in both countries.

This global growth has been rooted primarily in the economic strength of the United States and, by reflection, of Canada. Specifically with regard to the U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have

U.S. economy, growth has come from strong household demand, while net national savings have been negative. By comparison, in emerging Asia household demand has been weak, while net national savings have been very high. These forces have contributed to the global current account imbalances that have now become an important macroeconomic concern.

These global imbalances are caused by the large and persistent U.S. current account deficit, which is mirrored by current account surpluses in Asia and in many oil-exporting countries. And these imbalances have grown to the point where the United States needs to attract 70 percent of the world's capital flows to finance its current account deficit - clearly an unsustainable situation.

Additionally, following events such as the Asian and Russian financial crises of the late 1990s and the bursting of the tech bubble earlier this decade, Central Banks around the world have injected a lot of liquidity into the global economy. Clearly, this liquidity has helped to encourage the strong growth in North America of recent years. But now, Central Banks are in the process of removing some of it. The interest rate increases seen to