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US increasingly driving global trade deficits: IMF report


Alwihda Info | Par peoplesdaily - 7 Août 2018

The US ran a $466 billion current-account deficit in 2017, meaning the nation imported far more than it exported. The US has become an increasingly large driver of global deficits, accounting for 43% of all global deficits last year, up from 39% in 2016, according to the IMF’s annual assessment of the state of global imbalances.


People's Daily

The US remained by far the largest driver of global current-account imbalances in 2017, and its shift toward much larger fiscal deficits is likely to increase imbalances in the coming years, according to the IMF’s 2018 External Sector Report.

The organization urged all countries to jointly address global trade imbalances and warned that external imbalances across the world could aggravate the financial environment and pose a threat to the global economy, #IMF chief economist Maurice Obstfeld said at a news conference.
The report points out that the surpluses and deficits have been increasingly concentrated in the largest advanced economies, including the US, especially in the past five years, and this will foster protectionism and further harm US and global economic growth.

Just as debt-ridden families may not be able to obtain loans, economies with excessive current-account deficits and excessive loans from abroad are more likely to be affected by the sudden stagnation of capital flows, which will not only undermine the stability of individual countries, but the world at large.

The US ran a $466 billion current-account deficit in 2017, meaning the nation imported far more than it exported. The US has become an increasingly large driver of global deficits, accounting for 43% of all global deficits last year, up from 39% in 2016, according to the IMF’s annual assessment of the state of global imbalances.

The US had a deficit with other 102 countries around the world in the trade of goods, which reflects the serious shortage of domestic savings in the US. With tax reform and a growing federal deficit, pressure on US domestic savings and its trade deficit will only intensify, noted Stephen Roach, a senior fellow at Yale University and former chairman of Morgan Stanley Asia.

Yet while the administration has communicated that it wants to reduce trade deficits, it has been increasing budget deficits. The Trump administration said that it expects annual budget deficits to grow nearly $100 billion more than previously forecast for each of the next three years, pushing the government’s budget deficit beyond $1 trillion starting next year, the Wall Street Journal reported.

The report also said that all countries should promote trade in services and work hard to enhance trade liberalization while modernizing the multilateral trading system.

(People's Daily)


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