IMF: Account imbalances may disrupt global marts

The way a few large countries run big current account deficits and others have large surpluses poses a risk to the global economy and could disrupt financial markets, said a senior International Monetary Fund (IMF) official yesterday.

Cooperation among countries with such deficits and those with surpluses is required to address such imbalances, said IMF deputy managing director Mitsuhiro Furusawa at a seminar here.

“We have witnessed sustained periods of imbalances. While they have narrowed since the (global financial) crisis, they remain above desirable levels,” he said.

Global imbalances have reemerged as a contentious topic in the international community as President Donald Trump criticised countries such as China, Germany and Japan for accumulating big trade surpluses against the United States.

The IMF will facilitate global efforts to reduce imbalances by strengthening safety nets that countries can rely on in case they face disruptive capital outflows, without accumulating excessive foreign reserves.