July 24, 2018

  • Excess imbalances remain generally unchanged, increasingly concentrated in advanced economies. Their persistence is fueling trade tensions among countries.
  • The configuration of imbalances does not pose an imminent danger. Yet, if unaddressed, it could threaten global stability down the road.

We have just released the latest assessments of the current account balances for the 30 largest economies in our 2018 External Sector Report (ESR). These assessments are a key aspect of the IMF’s mandate to promote international monetary cooperation and help countries build and maintain strong economies. They try to answer the difficult and often contentious question of when current account surpluses and deficits are appropriate or when they signal risks. Before jumping into the results, a bit of background is useful.

To start, surpluses and deficits in and of themselves need not be problematic and may well be appropriate and beneficial. For example, young, fast-growing economies need to invest to grow—so they often tap external resources by importing more than they export and borrowing to cover the implied deficit.  In contrast, rich, aging countries may need to save to prepare for when workers retire—so they run surpluses and lend to deficit countries.

Excess imbalances are increasingly concentrated in advanced economies. Den Rest des Beitrags lesen »