How Important Are Global Saving Imbalances?
Key takeaways
- Markets How Important Are Global Saving Imbalances?By James Broughel,
- Forbes contributors publish independent expert analyses and insights.
- To see why, it helps to begin with an accounting identity.
Markets How Important Are Global Saving Imbalances?By James Broughel,
Forbes contributors publish independent expert analyses and insights. James Broughel is an economist focused on the economics of regulation.Follow Author May 10, 2026, 06:55am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.Global imbalances are smaller than they were in 2007, but they have not disappeared.getty Few topics in international economics dominated the policy conversation of the early 2000s as completely as global saving imbalances. The fear at the time was that the United States had become the borrower of last resort for the world’s excess saving, running current-account deficits on a scale that could not continue indefinitely, and that when the imbalance unwound, the adjustment might be abrupt and ugly. Two decades on, the imbalances are smaller and the rhetoric is calmer, but the underlying economics has not gone away.
To see why, it helps to begin with an accounting identity. In an open economy, the current account reflects national saving minus domestic investment. A surplus country saves more than it invests at home and sends the difference abroad. A deficit country does the reverse. It invests more than it saves domestically and finances the gap by borrowing from abroad. That is why economists who study global saving imbalances usually begin with current-account balances.