The savings glut has in turn had a contribution into the increase in prices on the stock exchanges in the US, and subsequently to the increase of property prices, which has in turn lowered the level of savings of American households. The International Monetary Fund argues against the hypotheses of Bretton Woods 2 and the global savings glut by stating that the source of the current account surplus is an exceedingly low level of investments in Asia, except for China. Therefore, one should speak of a global investment draught rather than anything else, 30 as over the five years following the Asian crisis in 1997-1998, the investment level was by 7 percentage points lower than in the five-year period preceding that crisis. Considering the above, an appropriate recommendation for those countries is not limiting their savings rate, but rather improving their investment climate. There are numerous theories that attempt to explain the occurrence of global imbalances. According to some of them, the major reason behind global imbalances is the low level of savings in the US household and public sectors, 31 i.e. the fact that Americans spend more than they earn, and that the budget deficit, from a substantial surplus in the year 2000, turned into a level estimated at 4.7% of the GDP in 2004.
Urban Bäckström: The Swedish economy Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, to the Swedish Shareholders’ Association, Stockholm, 27 November 2001. *  *  *  First a word of thanks for the invitation to this evening’s meeting. I intend to talk about the Swedish economy and monetary policy. The past year has been marked by a successive weakening of economic activity in Sweden as well as abroad. Forecasters all over the world have made sizeable downward revisions to the prospects for growth both this year and next. Consider the picture of the economic future that Consensus Economics compiles once a month from the predictions of 200 professional observers. At the beginning of this year the combined assessment was that in 2001 and 2002, GDP growth in the United States and Sweden would amount to between 2.6 and 3.5 per cent. It was foreseen that the slowdown would be comparatively moderate and be followed by a quick recovery. Today, growth in the United States is judged to be just a modest 1 per cent or so this year and even weaker in 2002. In Sweden, GDP is now expected to rise 1.4 this year and 1.7 per cent next year. In other words, it now looks as though the slowdown will be both deeper and more protracted than many observers counted on less than a year ago.