Two developments have dominated the international economic landscape over the past several years. First, large global external imbalances have persisted, including a large current account deficit in the United States matched by surpluses in other advanced economies, in emerging Asia and—more recently—in fuel-exporting countries (Figure 2.1). These imbalances have been matched by corresponding shifts in net foreign asset positions, although—particularly for the United States—this has been partly offset by valuation changes, reflecting exchange rate movements in conjunction with changes in the relative price of U.S. financial assets. Second, energy prices have risen sharply since 2003 (Figure 2.2), driven both by strengthening global demand and most recently by concerns about future supply.1 With limited excess capacity, the medium-term supply-demand balance is expected to remain very tight, and oil prices will persist near current levels.