Simultaneous action across major economies to address these would be most effective. But even unilateral action could make a meaningful difference - albeit at a greater cost to global growth. Otherwise, on current trends, the risk of a more disruptive adjustment in the future will rise. 4/

Excess current account balances also increased in 2025, with the US and China as the largest contributors. These trends are likely to continue unless growing domestic macro imbalances (low private and public saving in the US; housing downturn and weak social safety net in China) are addressed. 3/

Not all current account surpluses or deficits are a concern. Our report assesses the extent of excess imbalances (“current account gaps”) - which increase vulnerabilities, heighten trade tensions, and create spillovers. 2/

This morning, we published the IMF’s External Sector Report, analysing global current account balances in 2025: www.imf.org/en/publicati... Global imbalances shrank after the GFC, but have been growing again since the pandemic. This trend continued in 2025. 1/

📈IMF April WEO📉: If the Middle East conflict remains short-lived, global growth is down to 3.1 percent in 2026 - and inflation up to 4.4 percent. More adverse impacts are possible, especially if energy supply dislocations extend into next year.

The global economy continues to show resilience in the face of the tariff shock - but risks are rising. Summary of today’s IMF World Economic Outlook update: www.imf.org/en/blogs/art...

However, it appears that trade in modern services (the fastest-growing portion of international services trade) is most vulnerable to geoeconomic fragmentation. This could emerge as a headwind for services globalisation going forward.

We find that - in contrast with goods trade - the answer is: no (so far!).

📈IMF April WEO📉: 2025 global growth forecast would have been 3.2% pre-April 2 (down just 0.1 from January). It is 2.8% given the post-April 2 trade policy announcements. Even if all “tariff pauses” become permanent, global growth remains at 2.8% (but differently distributed across countries).

Nice chart by @chrisgiles.ft.com putting the scale of President Trump‘s tariff announcements in historical context. www.ft.com/content/c2e4...

What will be the economic impact if the EU pursues its goals for EV adoption and allows China to capture a big share of the EU car market? Jiaxiong Yao and I provide some answers in this F&D article: www.imf.org/en/Publicati... (non-technical; gory details here: www.imf.org/en/Publicati...)

Back in Barcelona for a special occasion: the 30th anniversary of CREI @upfbarcelona.bsky.social 🎉 I owe a huge debt to the people here for teaching us, by example and with much patience, what good research in international economics can look like. We need it now more than ever!

Encouraging foreign direct investment (FDI), raising car-sector productivity, and addressing economic dislocations are better placed to protect EU incomes and climate ambitions.

Restricting imports from China would protect the EU car sector but impose costs on other sectors that more than offset any benefits.

The adjustment would also require large labor reallocations away from the car sector in some countries.

The paper explores the effect on EU incomes if China’s increased share in Europe’s car market mirrors the U.S. experience with Japan in the 1970s. It finds that the GDP impact would be small for the EU as a whole, but vary widely across countries.

By 2035, the European Union (EU) wants all new cars bought in its borders to be electric vehicles (EVs). But could rising EV imports from China pose a threat for the economy? In new IMF research we quantify this tradeoff: imf.org/en/Publication… #EVs #ElectricVehicles

Check out the new issue of the IMF’s F&D magazine for insights on boosting productivity growth from a range of amazing contributors! 📈 And if you need a little explainer on why (macro)economists care about productivity, and why you should too, this B2B has you covered: www.imf.org/en/Publicati...