OpinionHow AI and geopolitical rivalry are breaking economic orthodoxy
Today’s imbalances go beyond exchange rates; they reflect concentrated technological investment in one economy and uneven risks in others
Global imbalances are once again taking shape, albeit differently than how they manifested before the financial crisis of the late 2000s.
Back then, the story was simple: some countries, led by China and Germany, saved too much, while the United States consumed too much. The answer, at least in theory, was also simple: surplus countries should rely more on domestic demand while deficit countries should save more; exchange rates should adjust.
Let’s start with the basic structure of the world economy. On the surplus side, the burden is spread across several economies: China, Japan, Germany and South Korea, as well as some energy exporters. On the deficit side, however, the picture is far more concentrated. The US remains the main absorber of global savings.
That concentration matters. A world in which one country absorbs a large share of excess global savings is more fragile. Shifts in that country’s asset prices, politics or policy choices can have outsize global effects.
This is where AI enters the story.