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

Weekly Investment Outlook: May 17, 2021 – Inflation stays centre-stage

Markets have been rattled by high U.S. inflation rates and price concerns seem likely to remain centre-stage for weeks to come. Gerit Heinz, Chief Investment Strategist at Deutsche Bank International Private Bank, explains the multiple factors behind increased inflation and discusses how markets may respond to this week’s developments in the U.S. and Europe.

  • Today

Debt sustainability: do recent yield increases matter?

Our latest CIO Special looks at levels of debt accumulated by governments and how recent moves in bond yields affect the refinancing of the government debt. It also describes consequences for investors.

  • 3 days ago

India: are high oil prices negative for equity markets?

Our latest CIO Special report looks at the impact of crude oil prices on the Indian economy and particularly the equity markets.

  • May 06, 2021


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.