IMF says Covid-19 spending pushes current account imbalances higher

The Covid-19 pandemic reversed a steady decline in global current account imbalances in 2020 as massive deficit aid spending in advanced countries combined with wider trade gaps for medical supplies and plunging demand for oil and travel, the International Monetary Fund said on Monday.

The IMF's annual External Sector Report showed that the combined current account deficits and surpluses widened to 3.2% of global economic output in 2020 from 2.8% in 2019.

These gaps are set to widen further in 2021 to nearly 3.4% of global GDP before narrowing to about 2.5% as budget deficits in the United States and other rich