Rectifying these imbalances is urgent, as the G7 and IMF may be underestimating their scale, failing to account for factors like state-directed technology policies, which play a significant role in boosting export competitiveness and expanding trade surpluses in successful exporting nations.
In the past week, both the G7 and the International Monetary Fund (IMF) warned that global imbalances are likely to worsen, threatening the global economy. These imbalances refer to the persistent surpluses of countries like China, Germany, oil-rich nations and several Asian economies such as Singapore, against the large deficits of the US and the UK.
Concerns are growing as these imbalances are set to soar, potentially prompting deficit countries to impose protectionist measures to force surplus nations to reduce their surpluses. The current trade war could worsen. These imbalances also highlight structural weaknesses in both surplus and deficit countries that must be addressed for everyone’s benefit.
