Christian Nolting, Global Chief Investment Officer and Markus Müller, Global Head of Chief Investment Office
Oct. 04, 2018

Recent trade tensions between the U.S., Europe and China have dominated the economic newsflow of late and spurred an intense debate about global trade. As intensifying trade tensions pose a significant risk to economic relationships and the global economy itself, it is important to examine global current account balances. In this report, we focus on the main global economies in terms of GDP: the U.S., Japan, China and Germany. 

 

Executive summary  

 

While it is true that excessive imbalances can pose a risk, it is not true that deficits are always a negative sign. To the contrary, they can be a force for good for a country’s economy, typically when young, fast-growing economies are in need of investment in order to grow. Such economies access external

resources by importing more than exporting and borrowing to cover implied deficits.

 

On the other hand, developed economies with ageing populations hold savings in order to finance retirement payments. As a consequence, if they lend to countries with deficits, that can, together with trade flows, cause current account surpluses.

 

Nevertheless, countries running current account deficits and therefore incurring debts need to invest the money in order to increase their productivity and output so that they can service their debts. Much like private households, using debt for consumption and living beyond one’s means is, other things being equal, not sustainable for any economy in the long run.

 

Examining the current account balance provides a comprehensive and detailed overview of global trade links and their underlying causes.

 

To download a PDF of the full report, please click here.

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S. No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Investments come with risk. The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk. CIO Office, Deutsche Bank Wealth Management, Deutsche Bank AG - Email: WM.CIO-Office@db.com.

You may also be interested in

Inflation: drivers and implications

Our new CIO Special looks at the important issue of inflation, brought into focus again by the economic impact of the coronavirus pandemic.

  • Jun. 16, 2020

UK economy: a perfect storm

In our new CIO Special, we look at how COVID-19 has hit the UK economy, exacerbating previous weaknesses.

  • Jun. 08, 2020

China: recovery adds to investor appeal

In this new CIO Special we identify China’s economic recovery and the investment opportunities post COVID-19.

  • Jun. 03, 2020


The content and materials on this website may be considered Marketing Material. The market price of an investment can fall as well as rise and you might not get back the amount originally invested.  The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.