China ,Germany, Japan, Saudi Arabia, and Russia have been placed on a new Watch List for countries that have excessively large current account surpluses and for not taking adequate corrective measures. Check out the full list.
Ahead of the G-20, President Obama rightly stated that all countries, surplus as well as deficit economies, have a responsibility to help rebalance the global economy. For too long, current account deficit economies have borne the major burden of adjustment to the detriment of world economic growth.
In recognition of the negative impact chronic surplus economies have on global demand, the Economic Growth Program at the New America Foundation has launched the Current Account Surplus Watch. The Surplus Watch is the first comprehensive measure of economies with large current account surpluses that also takes into account the policies economies take to stimulate demand or otherwise offset their surpluses.
Unlike the simple numeric current account targets that U.S. Treasury Secretary Timothy Geithner has proposed, the Surplus Watch takes into consideration the policies countries pursue to increase domestic and international demand through fiscal expansion, exchange rate appreciation, and international development assistance. The Surplus Watch also divides surplus economies into two lists, Manufacturing Economies, which mainly export manufactured goods and Resource Economies, which mainly export energy commodities.
In many economies, surpluses remain elevated and are projected to rise more in the years ahead, threatening a sustainable world economic recovery. Leaders must pay attention to their rise and also the measures they can take to address these surpluses.
— Sam Sherraden