On economic and financial imbalances in the new geopolitical framework

This paper explores how global economic and financial imbalances have evolved amid rising protectionism and geopolitical tensions. While globalisation and technological change have had a positive impact on global growth and poverty reduction, they have also led to increased inequality, environmental degradation and debt. The paper discusses the structural causes and consequences of growing external and domestic imbalances, focusing on the sharp deterioration in the US net international investment position and the increase in market power among dominant technology firms. Besides creating market uncertainty and likely causing a recession, the significant unilateral reorientation of US trade and financial strategy could have major implications for international monetary and financial stability. Further weakening of global dialogue, cooperation, and commitment to institutional reform would make addressing savings-investment mismatches, managing the dominance of mega-tech firms, and navigating the transition towards a more balanced and resilient global system particularly challenging.