Global Balances Widen
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- Published: September 3, 2025
Key findings on global current account balances
- Global current account balances widened after a period of narrowing.
- They fell to a postpandemic low of 3 percent of world GDP in 2023, but widened to 3.6 percent last year.
- Adjusting for volatility from the pandemic and Russia’s war in Ukraine reveals a notable reversal of the narrowing since the global financial crisis.
- Several major economies have seen their surpluses or deficits expand, contributing to the growing divergence in current account balances.
- The IMF’s external assessment indicates that current account balances were out of line with fundamentals in several major economies in 2024.
- History demonstrates that global imbalances can unwind abruptly and painfully, signaling potential systemic risks.
Risks and interpretation
- 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.
- The observed widening may signal a significant structural shift in global external positions.
Policy recommendations
- A gradual correction is needed through concerted domestic macroeconomic policies to avoid abrupt and painful unwinding of imbalances.
- Deficit countries:
- Curb excess spending.
- Improve competitiveness to narrow their external gaps.
- Surplus countries:
- Boost domestic demand.
- Increase investment to better absorb their output.
- Collectively, these steps would gradually shrink imbalances and foster more balanced, resilient global growth.
Source: Global Balances Widen, F&D Magazine, September 2025; draws on the IMF’s 2025 External Sector Report.
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