"In July 2018, the International Monetary Fund (IMF) released its latest report on global trade imbalances that identifies countries with 'excessive' current account balances and exchange rates that are 'misaligned.' The current account is abroad measure of a country's global economic engagement and is comprised of trade in goods, services, and official flows. The report indicates that 40% to 50% of countries had imbalances that were 'excessive,' and that imbalances of about 3.25% of world GDP--both surpluses and deficits--remained constant in 2017, as indicated in Figure 1. In other words, some countries are saving too much and others are borrowing too much (globally, the combined saving and borrowing nets to zero, including statistical discrepancy). Individuals, businesses, and governments contribute to the saving rate. Advanced economies account for a rising share of the deficit: the United States has the single largest deficit. Other trade specialists argue that extensive cross-border capital flows have reduced the usefulness of the current account as a monitoring device and that policy prescriptions based on current account imbalances--and trade imbalances as the largest component of the current account--may be counterproductive."
CRS Insight, IN10972
Congressional Research Service: https://crsreports.congress.gov/