The global imbalances that were behind the financial crisis are still present. Some countries will be struggling with large fiscal deficits for some considerable time. However, it is conceivable that the imbalances will gradually diminish. Emerging economies are facing a period of considerable investment in welfare and infrastructure development. Households and firms will be able to reduce saving as welfare schemes and national capital markets are developed. In addition, many countries with an ageing population may find that an increasing number will have to draw down their wealth, resulting in a decrease in total saving. For European countries and the US, there is no doubt: deficits must be reduced and savings increased. Energy and commodity prices Let me move on to how the changes in the world economy have influenced commodity demand and commodity prices. Chart: Real prices for metals, food and oil The price of oil is now around USD 115 per barrel. Prices for other commodities such as metals and food are also high. A weak dollar, low interest rates and an ample supply of liquidity may have contributed to the rise in prices. We have also recently seen that prices are being pushed up by political unrest in North Africa and the Middle East. Nonetheless, strong growth in emerging economies and supply-side conditions have been the dominant factors in developments since the early 2000s. From 2000 to 2009 emerging economies accounted for 100 per cent of the growth in global consumption of primary energy sources.
Øystein Olsen: A changing global economy Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration (NHH) annual Spring Conference, Oslo, 31 May 2011 The text below may differ from the actual presentation. This speech does not contain assessments of the economic situation or current interest rate setting. *  *  *  Over the past decade, the pace of change in the global economy has picked up. Emerging economies1 have assumed a more prominent role. These developments have generated challenges and opportunities, not only in emerging economies but also in the advanced economies. In my speech today, I would like to focus on three key macroeconomic trends:   First, the global economy has long been characterised by substantial imbalances in international trade. Large surpluses in many emerging economies have their counterpart in large deficits in traditional industrial economies. This generates tensions.   Second, capital markets have not been able to cope with the high level of saving in emerging economies. Real interest rates have been low for a long period and new imbalances have arisen. Sovereign debt is now high in a number of countries.   Third, growth in emerging economies has resulted in higher demand for energy and commodities. While the price of money has fallen, prices for energy and commodities prices have been pushed up. This has amplified the imbalances for many countries, but has had a favourable impact on Norway.