## Picture This

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### Global trend in current account balances
- Global current account balances widened to 3.6 percent of world GDP in 2024, reversing a narrowing that saw them fall to a postpandemic low of 3 percent of world GDP in 2023.
- Adjusting for volatility from the pandemic and Russia’s war in Ukraine reveals a notable reversal of the narrowing since the global financial crisis, which may signal a significant structural shift.
- Global current account balances are the sum of the absolute values of current account surpluses and deficits.

### Key findings from the 2025 External Sector Report
- The IMF’s external assessment shows that current account balances were out of line with fundamentals in several major economies in 2024.
- Large, persistent imbalances often signal vulnerabilities and typically reflect distortions—for example, a mismatch between a nation’s saving and investment—that leave economies more exposed to shocks.
- History demonstrates that global imbalances can unwind abruptly and painfully; a gradual correction through concerted domestic macroeconomic policies is needed to avoid such a scenario.

### Policy recommendations
- Deficit countries:
  - Curb excess spending.
  - Improve competitiveness to narrow their external gaps.
- Surplus countries:
  - Boost domestic demand.
  - Increase investment to better absorb their output.
- These steps would gradually shrink imbalances and foster more balanced, resilient global growth.

### Balance check — current account balances (percent of GDP)
- Advanced economies (2022, 2023, 2024):
  - SINGAPORE: 18.4, 17.7, 17.5
  - HONG KONG SAR: 10.2, 8.5, 12.9
  - GERMANY: 3.8, 5.6, 5.7
  - KOREA: 1.4, 1.8, 5.3
  - SPAIN: 0.4, 2.7, 3.0
  - UNITED STATES: -3.9, -3.3
  - THE NETHERLANDS: 6.6, 9.9, 9.9
  - SWEDEN: 4.7, 7.0, 7.4
  - SWITZERLAND: 8.7, 5.2, 5.1
  - JAPAN: 2.1, 3.8, 4.8
  - ITALY: -1.7, 0.1, 1.1
  - FRANCE: -1.2, -1.0, 0.4
  - CANADA: -0.3, -0.6, -0.5
  - BELGIUM: -1.3, -0.7, -0.9
  - UNITED KINGDOM: -2.1, -3.5, -2.7
  - AUSTRALIA: 0.4, -0.3, -1.9
- Emerging market and developing economies (2022, 2023, 2024):
  - RUSSIA: 10.4, 2.4, 2.9
  - CHINA: 2.4, 1.4, 2.3
  - THAILAND: -3.5, 1.4, 2.1
  - SOUTH AFRICA: -0.5, -1.6, -0.6
  - TÜRKIYE: -5.1, -3.5, -0.8
  - INDIA: -2.0, -0.7, -0.8
  - INDONESIA: 1.0, -0.1, -0.6
  - BRAZIL: -2.2, -1.3, -2.8
  - MALAYSIA: 3.2, 1.5, 1.4
  - MEXICO: -1.2, -0.3, -0.3
  - POLAND: -2.3, 1.8, 0.2
  - SAUDI ARABIA: 12.1, 2.9, -0.5
  - ARGENTINA: -0.6, -3.4, -3.9
  - (Coverage of Argentina started in 2018.)

### External snapshot — alignment with fundamentals
- External sector assessments (using a wide range of indicators) classify economies as:
  - Stronger than implied by fundamentals (examples shown across 2015–2024): SINGAPORE, SPAIN, MALAYSIA, POLAND, MEXICO, SWEDEN, THE NETHERLANDS, GERMANY, INDIA, EURO AREA, CHINA.
  - Broadly in line with fundamentals: RUSSIA, SOUTH AFRICA, KOREA, SWITZERLAND, INDONESIA, BRAZIL, SAUDI ARABIA, FRANCE, HONG KONG SAR, THAILAND, JAPAN.
  - Weaker than implied by fundamentals: AUSTRALIA, CANADA, UNITED STATES, ARGENTINA, UNITED KINGDOM, ITALY, TÜRKIYE, BELGIUM.
- The widening of global balances and the number of economies out of line with fundamentals underscore the need for policy adjustment at home to reduce vulnerabilities.

*SOURCE: IMF, 2025 External Sector Report.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2025/09/picture-this.pdf_