Global current account imbalances continue to widen, with rising Asian surpluses the main driver

Overview

The report interprets the IMF’s 2026 External Sector Report, covering 30 major emerging market and advanced economies. In 2025, the absolute sum of global current account surpluses and deficits rose from 3.6% to 3.7% of global GDP, continuing the upward trend since the pandemic. The widening was mainly driven by larger surpluses in China and other Asian economies, as well as wider deficits in Turkey, Canada, and the United Kingdom; the U.S. deficit narrowed. Both the IMF and Goldman Sachs believe global imbalances may widen further in 2026, requiring coordinated policies from surplus and deficit countries.

Core views

The flow and stock dimensions of global external imbalances are diverging: current account imbalances widened, while net international investment position imbalances improved slightly due to valuation effects from exchange rates, asset prices, and nominal GDP growth. Measured as a share of GDP, the largest positive and negative imbalances remain concentrated mainly in advanced economies; although China’s surplus is not the highest relative to GDP, it is now the largest in absolute terms globally. Persistent deficits increase vulnerability to sudden stops in financing and reversals in capital flows, while persistent surpluses may depress real interest rates and drive higher leverage and risk appetite. The most effective rebalancing path is for deficit economies to pursue fiscal consolidation, while surplus economies expand domestic demand through structural reforms.

Analysis framework

The report combines the IMF’s External Balance Assessment model, stock-flow analysis of current accounts and net international investment positions, the savings-investment framework, and Goldman Sachs’ sustainable current account model targeting a stable long-term net foreign assets-to-GDP ratio to cross-check external positions, real effective exchange rate deviations, and required policy adjustments across 30 economies.

Methodology notes

• External balance assessmentIMF External Balance Assessment

  Current account gap and real effective exchange rate gap

  The IMF estimates medium-term current account norms based on savings and investment fundamentals such as demographics and fiscal policy, and uses semi-elasticities to translate the difference between actual balances and norms into real effective exchange rate gaps.

• Macroeconomic identity analysisSavings-investment framework

  The current account equals the difference between domestic savings and investment

  The IMF attributes the widening of imbalances in 2025 to weak investment rates in surplus economies, especially China and the euro area, while public savings remained persistently low and investment demand strong in deficit economies, particularly the United States.

• External debt sustainabilityNet international investment position stability framework

  Sustainable current account

  Goldman Sachs defines the sustainable balance as the current account that can stabilize the long-term net foreign assets or liabilities-to-GDP ratio at a feasible level, and uses this to identify economies whose balances are too high or too low.

• Stock-flow analysisCurrent account and net international investment position decomposition

  Transaction flows and valuation effects

  Net international investment positions are affected not only by current account flows, but also by exchange rate and asset price changes; positive valuation effects in 2025 offset part of the stock deterioration caused by wider current account imbalances.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• U.S. dollar and U.S. external balance sheet

  The United States remains the world’s largest current account deficit economy, but both its deficit and net international investment position improved slightly in 2025.

  Strengths

  A weaker dollar can reduce the value of external liabilities measured in domestic currency, and U.S. nominal GDP growth also helps improve the net liabilities ratio.

  Weaknesses

  Low public savings and strong investment demand keep the structural deficit persistent, and reliance on external financing remains high.

  Comparison

  The U.S. deficit accounts for about 0.9% of global GDP, broadly offsetting the combined surpluses of China, the euro area, and oil exporters.

  Risks

  Insufficient fiscal consolidation, tighter global financial conditions, or reversals in capital inflows could exacerbate volatility in the dollar, interest rates, and risk assets.

• China and Asian surplus economies

  Rising surpluses in China, South Korea, Taiwan, Japan, and other economies are the main source of widening global imbalances.

  Strengths

  Trade surpluses and the accumulation of external net assets strengthen external financing resilience, and China’s surplus is the largest globally in absolute terms.

  Weaknesses

  Insufficient domestic investment and demand increase reliance on external growth and add pressure from trade frictions and policy rebalancing.

  Comparison

  Mainland China, South Korea, and Taiwan all show current account balances that are too high under both the IMF and Goldman Sachs frameworks.

  Risks

  Restrictive measures by major trading partners, slower global demand, or local-currency appreciation could all compress exports and surpluses.

• Global sovereign bonds and real interest rates

  Persistent large surpluses increase demand for safe assets and may depress global real interest rates.

  Strengths

  Abundant cross-border savings can support bond demand and financing conditions in the short term.

  Weaknesses

  A low-rate environment may encourage leverage accumulation and distort capital allocation.

  Comparison

  Excess savings in surplus economies correspond to fiscal and investment financing needs in deficit economies.

  Risks

  If policy adjustments or capital flows reverse suddenly, term premia and financing costs could rise rapidly.

• High external debt and persistent deficit economies

  Goldman Sachs assesses external balances in economies such as the United Kingdom, Turkey, and Brazil as too low, and deficits in some economies are still widening.

  Strengths

  With credible fiscal and structural reforms, external gaps have room to converge.

  Weaknesses

  Negative net international investment positions and persistent financing needs weaken resilience to external shocks.

  Comparison

  Measured as a share of GDP, major negative imbalances are more concentrated in advanced economies, but financing vulnerabilities are more pronounced in some emerging markets.

  Risks

  Sudden stops in financing, capital outflows, local-currency depreciation, and rising refinancing costs may reinforce one another.

Key data

• Global external imbalances3.6% of global GDP in 2024, rising to 3.7% in 2025Calculated as the sum of the absolute values of global current account surpluses and deficits.
• Increase in China’s surplusAbout $300 billionEquivalent to nearly 0.25% of global GDP, the largest current account increase in absolute terms over the past 25 years.
• U.S. current account deficitNarrowed from 4.0% to 3.6% of GDPIts share of global GDP fell from 1.1% to 0.9%, but the United States remains the world’s largest deficit economy.
• U.S. net international investment positionImproved from -90.6% to -89.5% of GDPSupported by a narrower deficit, nominal GDP growth, and favorable valuation effects from a weaker dollar.
• Detailed IMF coverage30 economiesIncludes 14 emerging market economies and 16 advanced economies.
• Economies moving further away from fundamentals13Their current accounts or real exchange rates moved further away from the levels consistent with fundamentals as defined by the IMF.

Impact & implications

Widening global imbalances imply greater medium-term adjustment pressure on exchange rates, interest rates, and cross-border capital flows. If financing conditions tighten, deficit economies such as the United States may face slower capital inflows and fiscal adjustment pressure; China and other Asian surplus economies face policy requirements to expand domestic demand, raise investment, and promote imports. Excess global savings may continue to depress real interest rates and push investors toward higher-risk assets, but if policy or capital flow directions reverse, leveraged assets and economies with high external debt may see more severe adjustments. Coordinated policies would help reduce negative spillovers, while unilateral tariffs or disorderly tightening could amplify growth and market volatility.

Risks

• Persistent large deficits may trigger sudden stops in financing or reversals in capital flows, with economies whose net international investment positions are deeply negative particularly vulnerable.
• Persistent large surpluses may depress global real interest rates, prompting investors to chase higher-yielding assets and increasing financial leverage.
• The 2026 oil price outlook is affected by the Iran war and Middle East production losses, creating significant uncertainty around changes in external balances for energy exporters and importers.
• China’s official current account data may underestimate the true surplus, and statistical discrepancies may also affect the closure between global surpluses and deficits.
• A lack of coordinated fiscal, exchange rate, or trade policies may cause growth losses and negative cross-border spillovers.
• Exchange rate and asset price valuation effects may temporarily improve net international investment positions, but cannot substitute for structural adjustment of the current account.

What to watch

• Whether trade surpluses in China, South Korea, and other Asian economies continue to widen in 2026.
• Whether U.S. fiscal policy, public savings, and the current account deficit improve further.
• Subsequent IMF revisions to the scale of global imbalances in 2026 and medium-term adjustment scenarios.
• The trend of the dollar and its impact on valuation of the U.S. net international investment position.
• The redistribution of current accounts for energy exporters and importers caused by oil prices and changes in Middle East production.
• Whether structural reforms to expand domestic demand in surplus economies and fiscal consolidation in deficit economies can advance simultaneously.
• Whether global real interest rates, capital flows, and financing pressure in high-external-debt economies reach an inflection point.