Doha: Qatar National Bank (QNB) highlighted significant global economic imbalances, particularly concentrated in the United States economy, both in terms of flows (current account deficits) and stocks (cross-asset positions). It warned that a further deterioration of these imbalances could increase the likelihood of a disorderly adjustment in global markets.
According to Qatar News Agency, the bank's weekly commentary explained that the trade policies adopted by US President Donald Trump, especially those related to tariffs, were designed to address part of these imbalances. However, due to the accumulated scale of the issue, it is unlikely that unilateral or bilateral measures alone would be sufficient to deliver a smooth adjustment.
QNB noted that overcoming such economic challenges requires a coordinated international approach, stating that optimal policy alignment cannot be achieved without effective global cooperation, as was the case in managing previous major economic crises.
According to the bank, it is no secret to analysts and investors that President Trump has a strong political will to reform the global trading and financial system. For decades, even before entering politics, Trump had been vocal about his negative views on the large US current account deficits and the country's net debtor position against the rest of the world. He has also consistently supported the re-shoring of manufacturing to the US.
It indicated that Trump did not take decisive steps during his first term (2017-2021) to implement his vision due to various factors, including administrative constraints, limited resources and political experience, and his reliance on mainstream advisors with traditional views on trade and finance.
The weekly commentary described Trump's 2025 agenda as the most significant departure from the liberal free trade consensus that has prevailed since the post-World War II era. It characterized his approach as "protectionist."
It added: "At the heart of this reorientation is a very particular diagnosis that the country's external imbalances are the result of asymmetric economic relationships, i.e., unreciprocated market access, persistent foreign subsidies, intellectual property theft, and the burdens of underwriting 'global public goods,' from reserve currency provision to military security."
According to QNB, there are two main factors that explain why some US political circles believe bold action is needed to mitigate the risks posed by economic imbalances.
The first is that the US current account balance, which measures the flow of goods, services, income, and current transfers between the US and the rest of the world, has shown persistent structural deficits. The US has recorded surpluses in only three of the last 48 years and has not registered any surplus since 1991. After some relative improvement between 2007 and 2019, driven by the Global Financial Crisis and the Shale Revolution, deficits widened again post-COVID-19.
Last year, the nominal deficit reached USD 1.1 trillion, with negative balances across all major components of the current account except for services (travel, education, financial services). This indicates that US households, companies, and the government collectively consume more than they produce, requiring external financing.
QNB warned that if this trend continues, the US will become increasingly vulnerable to fluctuations in capital flows and foreign investment decisions.
The second factor, according to QNB analysis, is the multi-decade accumulation of current account deficits, which has resulted in a significant imbalance in the United States' Net International Investment Position (NIIP), the difference between US-owned assets abroad and foreign-owned assets in the US.
The bank explained that this accumulation has made the US a large net debtor to the rest of the world, particularly to industrial powers such as Germany, Japan, and China.