Share this page!

Brad Setser Profile picture
Twitter logo
13 Oct, 4 tweets, 2 min read
It is, of course, nice to be quoted in the Economist.

tis even nicer to see that the financial press is starting to notice that, well, China is heading toward record (USD) external surpluses ...

economist.com/special-report…
The "China is heading toward external deficits" argument has long been out of date -- arguments are now catching up to the data.

And, as "Free Exchange" notes this week, when demand and monetary policy are constrained, trade imbalances are a problem

economist.com/finance-and-ec…
A lot of the US demand side stimulus, for example, has spilled over to the rest of the world (in part because of the shift in demand toward goods). US is left with the debt (admittedly at v low rates) without a // boost to output ...
It is a big week for data on imbalances.

China will report its September surplus later today.

And I at least am curious to see if the IMF will update its current account forecasts in the new WEO (the ESR/ EBA numbers from this summer are now WAY out of date)

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Brad Setser

Brad Setser Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @Brad_Setser

Brad Setser Profile picture
14 Oct
I worry that the IMF's agenda this fall is far less ambitious than the current shock demands.

One way of framing this point is that the IMF so far has provided less financing to limit the impact the impact of COVID-19 on the world than it provided to Argentina alone.

1/x Image
Another way of framing the issue is that the bulk of the IMF's balance sheet is sitting unused -- and there doesn't seem to be much of a plan to bring it to bear to held vulnerable countries finance higher levels of spending in the crisis.

2/x Image
The IMF has funds to cover the world's maturing sovereign hard currency bonds many times over. There isn't a systemic crisis from hard currency EM debt lurking just over the horizon. So the IMF could do more to help a broader set of countries meet current fiscal needs

3/x
Read 14 tweets
Brad Setser Profile picture
14 Oct
The Taiwan dollar certainly looks like a managed currency -- and the central bank seems to come in toward the close of the trading day more or less all the time.

But the CBC is also making a bid to avoid crossing the Treasury's trip wires ...

reuters.com/article/taiwan… Image
To be fair, the period of heaviest management (July and August) isn't covered the CBC's disclosure -- and Treasury's fx report *due tomorrow but likely to be postponed * only looks at data through h1
On the other hand the CBC could reinforce its disclosure about its intervention by publishing more detailed data on reserves -- including a backward looking monthly time series on its forwards and ongoing data on its domestic fx deposits ...
Read 5 tweets
Brad Setser Profile picture
14 Oct
As I noted earlier today, Anna Gelpern and I have been the project directors for the Group of Thirty Working Group Report on Sovereign Debt and Financing for Recovery.

The report broadly speaking is a call for the international community to do more

1/x
prweb.com/releases/g30_c…
More to provide financing to low income countries that have been hard hit by the pandemic -- external inflows (from exports, reduced remittances, reduced FDI) to the DSSI countries will likely fall by $150b this year

2/x
The $12-13b from a fully implemented DSSI with full CDB participation wouldn't have offset this shock -- and certainly the $5 to $5.5b in relief actually provided is wildly insufficient. It doesn't even cover the $10b in interest on on commercial and bilateral debt

3/x
Read 15 tweets
Brad Setser Profile picture
14 Oct
Interesting chart from the IMF (WEO, chapter 1) --

A bit hard to read, but China leads the global recovery in industrial production, but lags in terms of retail sales ...

But Germany is almost as interesting. It is toward the top on the retail sales chart.

@M_C_Klein Image
Germany hasn't followed its 2009 playbook -- and it shows here. Germany's fiscal response to COVID also very different from its fiscal response to the global crisis.

As I have noted before, credit should be given where credit is due.
China of course hasn't totally followed its 09 playbook -- its stimulus has been much more restrained, and it is relying much more on exports (to my chagrin)

One continuity: China's ongoing reluctance to directly support household income.
Read 4 tweets
Brad Setser Profile picture
13 Oct
Somewhat disappointed in the IMF's global current account forecasts. The "imbalances" are shrinking frame misses the rise in imbalances in the two biggest economies.

IMF has US current account deficit falling in 2020?

And only a 30 bp increase in China's surplus in 2020? Image
Even with the surprise fall in China's September surplus ($10b of which looks to be a one off tied to chip stockpiling and the like) China is running a $100b plus quarterly surplus, and the US deficit is running at record levels in dollar terms ...
It doesn't seem like the IMF incorporated q2 current account data for either the US or China or for that matter much of Asia into its forecast ...

Here is what is in the last three months of global trade data. Don't see the "shrinking imbalances" Image
Read 5 tweets
Brad Setser Profile picture
13 Oct
Well, I certainly didn't see the surge in China's September imports coming (oil is down y/y).

Imports jumped over $25b v August, and were up more than 10% y/y

Exports stayed strong --

reuters.com/article/china-…
Big rise in imports pulled the overall surplus down -- annualized monthly surplus in the $450b range, well below the highs of July and August (tho still large)

q3 current account surplus now likely to be in line with q2, not above.
Increase in imports on first glance looks fairly broad based -- imports from the US are up, but so are imports from the EU
Read 11 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!

Like this author's thread?

Get email notifications when new thread is out from this Author!

Check out other threads from this Author!

Read all threads by @Brad_Setser