The International Monetary Fund (IMF) has warned that widening differences in how major economies save, spend, export and import could pose a growing threat to the global economy if governments fail to address underlying domestic challenges.
The warning was contained in a new analysis published on Thursday by IMF economists Jiaqian Chen and Josef Platzer. The report urged countries to focus on fixing domestic economic weaknesses instead of relying on tariffs and other trade restrictions to reduce trade imbalances.
According to the IMF, global trade imbalances widened further in 2025, driven largely by a sharp increase in China’s trade and savings surplus.
The report said China’s current account surplus, which measures the amount by which the country’s earnings from the rest of the world exceed its spending abroad, rose by about 300 billion dollars last year.
The Fund described the increase as China’s largest rise in current account surplus in dollar terms since at least 2000. It added that the surplus now accounts for about 0.6 percent of global economic output.
In contrast, the United States continues to record the world’s largest current account deficit. Although the US reduced its deficit by 69 billion dollars in 2025, the IMF said it still represents about 0.9 percent of global economic output.
The Fund noted that the US deficit remains larger than the combined current account surpluses of China and the euro area.
The IMF said the widening gap comes at a time of rising trade tensions and significant changes in US trade policy. However, it stressed that past experience shows tariffs and trade barriers have not effectively reduced overall trade imbalances.
Instead, the report said such measures have mainly changed the sources of US imports. While imports from China have declined sharply, imports from other countries have increased.
The IMF explained that running a trade surplus or deficit is not necessarily harmful because countries regularly borrow, lend, import and export as part of normal economic activity.
However, it warned that problems emerge when trade imbalances become excessively large and persist for long periods, increasing economic and financial risks.
According to the report, China and the United States remain the biggest contributors to the global imbalance.
The IMF said weaker investment has pushed China’s surplus higher since 2023. Investment first declined in the property sector before spreading to factories, manufacturing and infrastructure projects.
The report also noted that Chinese households and businesses maintain high savings, partly because limited social safety nets encourage people to save more instead of spending.
High savings have reduced domestic consumption, making the country more dependent on exports.
The situation differs in the United States, where savings remain relatively low compared with spending. The IMF said the country’s large government budget deficit continues to contribute to its significant external deficit.
The Fund warned that prolonged imbalances could direct capital and investment into less productive sectors, increase financial risks and make future economic adjustments more painful.
It also cautioned that persistent trade gaps could slow global growth, spread financial shocks across countries, worsen trade disputes and deepen divisions within the global economy.
The IMF said history shows that large imbalances can reverse suddenly through capital outflows, falling asset prices and weaker economic growth, creating significant costs for both individual countries and the global economy.
To address the problem, the Fund called for coordinated action among major economies, particularly the United States, China and countries in the euro area.
It recommended that surplus economies such as China encourage stronger domestic spending and investment to reduce their dependence on exports.
The IMF also urged countries with large deficits to tackle the structural factors causing them to spend more than they save.
The Fund said governments should continue taking action even if reaching a global agreement proves difficult. However, it warned that unilateral measures could create additional risks for financial markets while affecting economic growth and inflation.
Looking ahead, the IMF said the global economy may remain resilient in the short term. Nevertheless, it warned that unresolved structural weaknesses could accumulate over time and increase the likelihood of a sharper economic correction in the future.
The Fund concluded that tariffs and trade restrictions alone cannot resolve widening global imbalances. Instead, governments must address the underlying issues involving public spending, household savings, investment and consumer demand to achieve more balanced and sustainable economic growth.
