If the financial crisis of 2008/09 is thought to be in part a result of the build-up of global imbalances, then the aftermath is the rebalancing of the global economy, obviously.
I talk a lot about the rebalancing of the Chinese economy. The reality, of course, is that this is just part of rebalancing the global economy. For instance, the fact that China is now more domestic demand driven (albeit more geared towards investment than consumption) than externally driven means that deficits in countries elsewhere must be smaller. And given that the other side is now running a smaller trade deficit, they must also be saving more than they did before. This is derived from the accounting identities of national accounting.
After the financial crisis, the size of China’s trade surplus has shrunk. The chart below shows the goods and services balance of the current account of the balance of payments.
On the other side of the planet (the deficits countries), of course, the US trade deficit is now smaller than before the crisis.
And remarkably, the trade balance for the Eurozone, which was not really in deficit before the crisis, is now surging into higher surplus, largely driven by the annihilation of peripheral countries’ current account deficits:
