By Andrea Shalal
Washington (Reuters) – The sales accounts of the overall current account were widely widened in 2024, reversing an in progress narrowing since the global financial crisis of 2008-2009, the international monetary fund said on Tuesday, warning that prices were not the answer.
In its annual report on the outside sector, which assesses imbalances in the 30 largest economies, the IMF noted that external surpluses or deficits were not necessarily a problem, but could cause risks if they became excessive.
He indicated that prolonged interior imbalances, a continuous uncertainty of budgetary policy and an escalation of trade tensions could deteriorate the feeling of global risks and raise financial stress, injuring both the nations of the debtor and creditors.
The report was aimed at the taxation by US President Donald Trump of higher import prices against almost all business partners, which, according to his administration, aims to increase income and rectify long -standing commercial deficits.
“A new escalation of the trade war would have significant macroeconomic effects,” he said, noting that higher prices would reduce global demand in the short term and increase inflationary pressures thanks to the increase in import prices.
The increase in geopolitical tensions could also trigger changes in the International Monetary System (IMS), which could undermine financial stability, he said.
This year’s report, based on 2024 data, has shown that the expansion of the world’s current account balances was largely due to an increase in excess sales in the three largest world economies – the United States, China and the Euro region.
The deficit in the United States has expanded from $ 228 billion to $ 1.13 billion of dollars or 1% of the world’s gross domestic product (GDP), while the surplus of China increased from $ 161 billion to $ 424 billion and the excess of the euro increased from $ 198 billion to $ 461 billion.
Domestic solutions
In a blog that accompanies him, the chief economist of the IMF, Pierre-Olivier Gourchas, said that excessive excess or deficits came from interior distortions, such as too loose budgetary policy in deficit and insufficient security nets which have caused excessive savings in surplus countries.
Changes targeted these domestic drivers – not prices – were necessary, he said. This meant that China should focus on increasing consumption, Europe should spend more on infrastructure and the United States had to reduce significant public deficits and slow down budgetary expenses, he said.
The report was based on the data collected before the approval of a massive bill for tax reduction and expenditure, which, according to the Congressional Budget Office, would add 3.4 dollars on Monday to the American deficit over 10 years, causing additional pressure.
