By Macromon, Global Macro Monitor,
We have ranked the world’s 2016 Current Account Balances (CAB) by country from largest deficit to largest surplus in the ginormous table below. The data are from the October 2016 IMF’s World Economic Outlook database. Note, 2016 are IMF estimates.
But, first, check out the current account balances of the G20. The world has come along way from the big imbalances at the beginning of the Obama Administration.
What stands out is the big flip in Saudi Arabia. A perennial exporter of foreign savings, the Kingdom is now is running a current account deficit and has to import capital or use up foreign reserves to support it. The Saudi currency and financial markets have come under pressure as the current account surplus has flipped to deficit due to the collapse in oil prices. Hence their desperation to raise oil prices.
The next few years are going to be interesting. If Mr. Trump gets his fiscal policy approved and implemented – large tax cuts and fiscal spending — by definition, the U.S. current account deficit is going to explode as it did under President Reagan, moving from a small surplus in 1980 to a deficit in 1987 of 3.3 percent in 1987.
Remember the National Accounting Identity,
(S-I) + (T-G) = (X-M)
(S-I) is the ‘private savings balance’ or the difference between private sector savings (S) and investment (I); (T-G) is the ‘government balance’ or the difference between tax receipts (T) and all government expenditure (G); (X-M) is the difference between exports (X) and imports (M) and is usually called the simple ‘current account balance’. –
Add that to that a strong dollar, which we think the index goes to 120, and presto — exploding current account deficit and that “sucking sound” you hear will be capital flowing in to the U.S. from the rest of the world. President Trump will be very conflicted as we know he doesn’t like trade deficits.
World Current Account Balances by country,
countries with the largest current account deficits, countries with the largest current account surpluses, global current account balances by country, global economic imbalances, global economic stats, global macroeconomics