Prospects for global imbalances in 2026 and beyond: Another China shock?

Global current account imbalances widened in the past two years, led by growing surpluses in China and deficits in the United States. Most forecasters expect imbalances to stabilize or even narrow in 2026 and 2027. Bayoumi and Gagnon disagree with these projections, concluding that China’s surplus will grow considerably, putting downward pressure on surpluses in Europe and the rest of Asia. The global economy may be on the cusp of a second, more intense China shock, with profound geopolitical and economic consequences.Read More