Report
A key inefficiency of the global economy: Savings are not used in the right places
A major source of inefficiency in the global economy is that savings are not flowing to the regions where they would be the most efficient. In particular, we note that: Due to controls on capital outflows, the savings of the Chinese remain in China and finance a lot of inefficient investments in the country; E xcess savings (visible in external surpluses) in the euro zone, Japan, China, oil-exporting countries and emerging countries finance external deficits in the richest OECD countries - the United States, Canada, Sweden and Australia - and not in low per capita income countries . S ome highly unlikely developments would be required t o correct these inefficiencies: China would have to remove its controls on capital outflows and be willing to lose a large share of its foreign exchange reserves; The United States would have to save more and transition to an external surplus, even though it can finance its sizeable external deficit without difficulty.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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