Global external imbalances widen as China's current-account surplus posts its largest expansion in 25 years, Goldman Sachs says
An IMF report on the external sector shows that global external imbalances—the sum of the absolute values of current-account surpluses and deficits—increased to 3.7% of global GDP in 2025 from 3.6% in 2024, extending the upward trend seen since the pandemic.
An IMF report on the external sector shows that global external imbalances—the sum of the absolute values of current-account surpluses and deficits—increased to 3.7% of global GDP in 2025 from 3.6% in 2024, extending the upward trend seen since the pandemic.
China's current-account surplus increased by about $300 billion, the largest expansion in absolute terms in the past 25 years. The U.S. current-account deficit, by contrast, narrowed to 3.6% of GDP in 2025 from 4.0%.
The IMF estimates that current-account balances in about half of economies have moved further away from levels implied by economic fundamentals. Goldman Sachs assesses that mainland China, South Korea, Taiwan and most developed-market creditor economies are "too positive," while the United States, the United Kingdom, Turkey and Brazil are "too negative."
The widening imbalances are attributed to weak investment rates in surplus economies, particularly China and the euro area, as well as persistently low public saving and strong investment demand in deficit countries, most notably the United States. The IMF expects imbalances to widen moderately again in 2026 and is calling for coordinated policy action.
Global external imbalances continue to widen, but the stock of net international investment positions has narrowed because of positive valuation effects. The imbalances are concentrated mainly in advanced economies rather than emerging markets. The IMF is calling for surplus and deficit economies to coordinate policies to promote rebalancing.
At the macro level, the note views the developments as negative for exchange-rate-sensitive deficit economies, including the United States, Turkey and Brazil, and positive for surplus economies such as China, Singapore and South Korea. The extent to which these risks and benefits are priced into markets varies, so policy actions in individual countries should be monitored.
Potential catalysts include the implementation of the IMF's call for coordinated policy action, including stronger domestic demand in surplus countries and fiscal consolidation in deficit countries; further changes in China's current-account surplus, which is currently the largest in absolute terms globally; movements in the U.S. dollar and their effect on net international investment position valuations; and changes in investment rates in major economies, particularly whether China's investment rate recovers.
China's current-account surplus increased by about $300 billion, the largest expansion in absolute terms in the past 25 years. The U.S. current-account deficit, by contrast, narrowed to 3.6% of GDP in 2025 from 4.0%.
The IMF estimates that current-account balances in about half of economies have moved further away from levels implied by economic fundamentals. Goldman Sachs assesses that mainland China, South Korea, Taiwan and most developed-market creditor economies are "too positive," while the United States, the United Kingdom, Turkey and Brazil are "too negative."
The widening imbalances are attributed to weak investment rates in surplus economies, particularly China and the euro area, as well as persistently low public saving and strong investment demand in deficit countries, most notably the United States. The IMF expects imbalances to widen moderately again in 2026 and is calling for coordinated policy action.
Global external imbalances continue to widen, but the stock of net international investment positions has narrowed because of positive valuation effects. The imbalances are concentrated mainly in advanced economies rather than emerging markets. The IMF is calling for surplus and deficit economies to coordinate policies to promote rebalancing.
At the macro level, the note views the developments as negative for exchange-rate-sensitive deficit economies, including the United States, Turkey and Brazil, and positive for surplus economies such as China, Singapore and South Korea. The extent to which these risks and benefits are priced into markets varies, so policy actions in individual countries should be monitored.
Potential catalysts include the implementation of the IMF's call for coordinated policy action, including stronger domestic demand in surplus countries and fiscal consolidation in deficit countries; further changes in China's current-account surplus, which is currently the largest in absolute terms globally; movements in the U.S. dollar and their effect on net international investment position valuations; and changes in investment rates in major economies, particularly whether China's investment rate recovers.