Global Account Balances Increased In 2020 After 5 Years Of Decline - IMF

Global Account Balances Increased in 2020 After 5 Years of Decline - IMF

WASHINGTON (UrduPoint News / Sputnik - 02nd August, 2021) Global account balances increased in 2020 and will continue to do so this year after having declined in the five years prior, the International Monetary Fund (IMF) said in a new report on Monday.

"After declining steadily since 2015, global current account balances - the sum of absolute deficits and surpluses - increased in 2020 and are set to widen further in 2021, amid diverging economic prospects across countries," the report said.

The IMF explained in the report that the set of advanced economies whose account balances increased did so from 69 percent in 2019 to about 72 percent the following year.

"The largest contributors to lower-than-warranted current account balances - as a share of world GDP - were, in order - the United States, France, the United Kingdom and Canada," the report said.

The Netherlands, Germany, Mexico, Poland and Russia were also among the largest contributors to larger-than warranted current account balances, the report also said.

The IMF said global current account balances will be narrowing gradually in the 2022-2026 period, but acknowledged that numerous uncertainties surround this forecast.

In addition, the IMF called on international cooperation to solve account balance-related issues.

"In the near term, policy efforts should focus on averting downside risks by ending the pandemic globally. Strong international cooperation is needed to secure up-front financing for vaccinations and public health measures," the report said.

Over the medium term, countries should be encouraged to take collective action to reduce global imbalances in a growth-friendly manner, the report added.