/ world today news/ Germany and Japan as “donors” of the world economy are drying up, and China’s positions are getting stronger
I constantly criticize and even openly oppose the International Monetary Fund (IMF) for the policies it pursues towards many countries, including Russia. But now I will pay a small compliment to this organization. The IMF has a very extensive information and statistical database that allows you to analyze the economies of individual countries using many indicators.
In addition, it enables international comparisons, comparing economies according to certain parameters and determining the economic trajectories of countries over fairly long periods of time. Access to the database is free. I will take advantage of this opportunity.
The IMF database contains statistics for several years on such blocks as balance of payments (BOP) and international investment positions (IIP) of member countries. PB and SIP have a whole set of indicators. But now I would like to focus on just two: 1) the balance of payments; 2) pure MIP (CHMIP).
These are the resulting (balancing) indicators of PB and IIP, and they allow you to understand whether a country is a net donor to the world economy or a net consumer. If a country is a net donor (it exports more goods, services and capital than it imports), then it can be called, figuratively speaking, a “feeder”. If it is a net consumer (imports are greater than exports), then it is a “fed” country. At the same time, I want to emphasize that there are temporarily “feeding” and temporarily “feeding” countries (that is, they alternately act in both roles). And there are stable groups of countries that constantly “feed” and, conversely, constantly “eat”.
The indicator of the balance of the balance of payments is usually considered the balance of the current account (export-import of goods and services plus the balance of investments and other income). If the balance of BОP is positive, then the country “feeds” the rest of the world. If the BОP balance is negative, it means that it is “powered”.
The IMF provides a list of the top 10 countries that at the end of 2021 had the largest positive balance of payments, that is, they were the most important “donors” of the world economy. Here they are (balance in parentheses, in billions of dollars):
1) China (352.9); 2) Germany (330.0); 3) Japan (197.2); 4) Netherlands (124.9); 5) Russian Federation (122.1); 6) South Korea (85.2); 7) Singapore (76.4); 8) Switzerland (72.1); 9) Ireland (70.9); 10) Norway (66.3).
The IMF has not yet compiled a top 10 list for 2022 (apparently due to the fact that last year’s information has not yet been collected for all countries). But for all countries on the 2021 list, information is now available on the IMF website. At least I already compiled the top 5 list based on last year’s results. Here’s how it looks ($ billion): 1) China (401.9); 2) Russian Federation (237.9); 3) Norway (174.6); 4) Germany (172.5); 5) The Netherlands (93.8).
Last year saw dramatic changes in the top donor pool. China’s balance of payments surplus increased by 13.9% over the year. But in Russia it is almost twice (with 95%), and in Norway it is as much as 2.6 times. The sharp increase in the role of Russia and Norway as “donors” is due to the rising prices of black gold and natural gas, which are the main export items of these countries.
In recent years, the list of the top 3 main donors to the world economy has been stable: China, Germany, Japan. By the way, in 2021, Russia was only in fifth place in terms of a positive BOP balance (after China, Germany, Japan and the Netherlands).
Many countries in the previous top 10 lists significantly reduced their surplus last year: Japan – to $90.9 billion (down 54%); Germany – up to $172.5 billion (up 48%); The Netherlands – up to $93.8 billion (up 25%); Ireland – up to $57.8 billion (18% growth). The reasons are clear, I won’t waste time explaining them.
At the end of last year, the total positive balance of payments of two countries – China and Russia – amounted to almost $640 billion. But for the remaining eight countries (from the 2021 top 10 list), the total balance for last year, according to my calculations, turned out to be equal to 790 billion dollars.
And which countries were the main users last year? Here is a list of them compiled by the IMF (in brackets is the value of the BOP negative balance in billions of dollars):
1) USA (971.6); 2) Great Britain (121.4); 3) India (79.1); 4) Brazil (53.6); 5) Romania (27.3); 6) Chile (27.1); 7) New Zealand (21.6); 8) Colombia (21.5); 9) Bangladesh (14.4); 10) Egypt (10.5).
As you can see, the US is far ahead of the rest of the top 10 countries. Nine countries in the top 10 had a total negative balance of payments equal to $376.5 billion. The United States accounted for 72% of the total negative balance of payments of the 10- they are the largest consumers of the world economy.
To this we can add that the USA “absorbed” approximately 2/3 of the total positive balance of the top 10 main donors to the world economy. For many years now, the United Kingdom has been in second place among consumers. Last year, the US and the UK accounted for more than 4/5 (81%) of the total negative balance of the top 10 major consumers.
It is noteworthy that in 2022 the leaders of the top 10 list saw a significant increase in their negative balances compared to 2021 in the USA – by 17%; in Great Britain – 2.6 times; in India – 2.4 times. I also note that for the period 2016-2022 The negative balance of the US balance of payments showed a record increase (compared to other top 10 countries): it increased from 396.2 billion to 971.6 billion dollars, i.e. 2.45 times.
The second key indicator is the country’s net international investment position (NIIP). The International Investment Position (IIP) shows the value of a country’s foreign assets and the value of foreign assets in the country itself. NIIP is the difference between a country’s foreign assets and its domestic foreign assets.
The first of these assets are formed as a result of the export of capital in various forms: direct investments, portfolio investments, other investments (mainly loans and credits). The second of these assets are formed as a result of the importation of capital in the same forms.
There is a close relationship between a country’s balance of payments and its IIP. The larger the balance of payments surplus, the greater the export of capital; therefore, the greater the foreign assets. A country with a stable balance of payments surplus rapidly accumulates foreign assets and has a large positive NMI. On the contrary, if the balance of payments is negative from year to year, then such a country will accelerate the accumulation of foreign investment in its economy, and the index of international investment will be negative. So, a country with a CHIP value with a plus sign is a “feeding” country, and a country with a minus sign is a consuming, “feeding” country.
I will indicate the countries from the top 10 list compiled by the IMF with the largest positive NIMIP values at the end of 2022 ($ billion):
1) Japan – 3.155.9; 2) Germany – 2,901.7; 3) China – 2,531.3; 4) Hong Kong – 1,761.3; 5) Norway – 1,178.8; 6) Singapore – 822.1; 7) Switzerland – 797.4; 8) South Korea – 771.3; 9) Netherlands – 768.7; 10) Canada – 655.6.
For reference: Russia traditionally has a very significant positive value of NMI, but it is not included in the top 10. Last year, this figure for Russia was 484.8 billion dollars.
Of course, almost every year there is some movement in the top 10 list. The growth rate of SMEIP varies greatly from country to country. So, for the period 2017-2022. in Japan the NMI increase was 8%; in Germany – with 66%; in China – with 23%; in Hong Kong – with 24%; in Norway – with 33%; in Switzerland – with 14%; in South Korea – almost three times; in the Netherlands – with 41%; in Canada – by 13%. But Singapore even saw its national average industrial income decline by 4%.
The top three in terms of NIMIP size for 2017-2022 remained the same. In 2017 alone, China ranked second (between Japan and Germany), and in 2022 it moved to third place. But if we consider that in addition to China (which is often called mainland China in IMF documents), there is also the so-called Greater China, which includes Hong Kong, we get a different layout. Greater China’s international investment in 2017 amounted to $3,486.4 billion (for Japan, this figure at the time was $2,916.6 billion). And at the end of 2022, Greater China’s international industrial investment increased to 4,292.6 billion dollars (which was 36% more than Japan’s figure).
Now let’s turn to the IMF’s list of the top 10 countries with the largest negative values of the NIIP indicator. These are the countries (billions of dollars with a minus sign):
1) USA – 16.172.3; 2) Spain – 864.6; 3) Brazil – 796.5; 4) France – 671.5; 5) Australia – 633.9; 6) Ireland – 630.5; 7) Mexico – 615.0; 8) India – 399.7; 9) Great Britain – 324.2; 10) Greece – 317.7.
Notably, the United States is far ahead of all other countries in the top 10 list. The combined NIIP of the nine countries following the United States is minus $5.255 billion. Thus, the United States has a negative NIIP that is more than three times the the combined negative NIIP of the next nine countries.
It is noteworthy that for the period 2017-2022 a number of countries in the top 10 have reduced the value of negative NIIP. Spain saw a decrease of almost 28%; in Australia – by almost 23%; in India – by 6.3%. Other countries during the mentioned period of time increased the negative value of NMI. For example, France – with 21%; Mexico – with 14%; Ireland – with 6%.
But all these increases pale in comparison to the gains of two countries – the UK and the US. In the first of these countries, the negative NMI increased by 3.45 times; for the second – 2.07 times. But if in Great Britain the absolute value of the increase is 230 billion dollars, then in the USA it is 8,341.6 billion dollars.
If we summarize the above figures and try to translate them into a more understandable language, we can say the following. China, Germany and Japan are traditionally the leading “donors” of the world economy. Since last year, however, the role of Germany and Japan as “donors” has begun to weaken significantly.
China’s position as a “donor”, on the contrary, has strengthened. Especially if by China we mean the totality of “mainland China” (the People’s Republic of China) and Hong Kong (“Greater China”).
Last year, the weakening of the donor functions of Germany, Japan and some other Western countries was partially offset by the unexpected strengthening of the role of Russia as a “donor”. However, this year, judging by preliminary estimates of its PB and ChIIP indicators, Russia’s donor role will significantly weaken.
As for the countries I loosely refer to as “consumers” or “eaters”, the United States of America outshines everyone here. Most of the donor countries’ BOP and IIP surpluses end up turning into US BOP and IIP deficits.
Donor countries have served America for many decades – roughly since the late 1950s and early 1960s. And in recent years, the scale of such services has increased significantly. This strange and frankly unfair nature of US relations with the rest of the world can be explained quite simply: in the hands of America is the “printing press” of the Federal Reserve, which unlimitedly produces the US dollar, which still retains the status of the world currency.
America “feeds” itself by receiving real values in exchange for the “greenback” (the figurative name for the US dollar). The indicators of US PB and MIP are a vivid manifestation of American consumerism, which would be more correct to call parasitism. However, there are signs that the era of American parasitism will soon be over.
Translation: ES
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