Global current-account balances widened again in 2025, with China and the United States the main drivers, according to the International Monetary Fund’s latest External Sector Report. The Fund says the larger gaps can leave the world economy more exposed to a disruptive adjustment if they persist.
A current account records a country’s trade in goods and services, income from overseas investments and cross-border transfers. A surplus means the country receives more through those channels than it pays out. A deficit means it pays out more than it receives.
The IMF’s 2026 External Sector Report assesses 30 large economies using 2025 data. Those economies account for more than 90% of global GDP, according to the Fund.
Trade balances are only part of the picture
Public debate often treats a current-account surplus as a simple measure of export strength and a deficit as a measure of weak competitiveness. The arithmetic is broader. At a global level, the gaps also reflect whether households, companies and governments are saving more than they invest, or investing and spending more than they save.
The IMF’s Executive Board said the United States’ external position was linked to persistently low saving. It associated China’s position with structurally high private saving and, more recently, weaker investment. The euro area’s current-account surplus, by contrast, narrowed to 1.7% of GDP in 2025 from 2.7% in 2024, according to the Fund’s euro-area assessment.
Those are not interchangeable stories. A country can run a surplus because consumers and firms save heavily, because investment is subdued, because it sells more abroad, or because of a mix of all three. The policy response depends on which forces are doing the work.
Why the Fund distinguishes excess balances
The report does not label every surplus or deficit a problem. Countries trade, invest overseas and borrow for many ordinary reasons. The IMF uses its External Balance Assessment to judge whether a position is broadly consistent with medium-term economic fundamentals and policy settings.
Its staff assessment says that global excess current-account balances also increased in 2025. That is a model-based judgement about positions that appear larger or smaller than the Fund considers warranted, not simply a ranking of the largest recorded surpluses and deficits.
Persistent excess positions can build political pressure for tariffs, currency intervention or abrupt spending cuts. They can also expose economies to sharp exchange-rate movements and capital-flow reversals if investors decide that a deficit country will struggle to keep borrowing, or a surplus country changes how it invests abroad.
Domestic policies determine much of the adjustment
The Fund’s central argument is that countries should address the domestic forces behind their external positions. In economies with large excess deficits and high public debt, that can include credible fiscal consolidation. In economies with persistent excess surpluses, the Fund points to measures that increase investment or reduce excess saving.
Co-ordinated action offers the better outcome in the IMF’s assessment because one country’s adjustment affects another country’s demand, exchange rate and capital flows. A deficit economy cutting spending on its own may narrow its external gap, but the resulting weaker demand can hurt trading partners. A surplus economy that invests more at home may add demand without requiring another country to contract at the same time.
The report does not offer a quick route to balance. Saving patterns, public finances, investment opportunities and exchange rates move slowly, and governments face different constraints. The report’s warning is narrower: trade measures alone cannot resolve gaps rooted in domestic saving and investment choices.
With trade tensions already high, the question is whether the large economies adjust through measures that raise domestic demand where it is weak and strengthen saving where it is too low, or through a more abrupt correction in trade and financial markets.
