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In a 'rebalanced' world economy, a diminished US role?

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• In early October, IMF forecasters gave an upward bump to their outlook. In part, this stems from stabilization in advanced economies. But the recession has amplified the importance of emerging economies. China and Bra­zil, to name two, appear to be recovering faster than expected. The IMF forecasts 5.1 percent growth in emerging nations next year, and just 1.3 in the advanced economies.

"The current numbers should not fool governments into thinking that the crisis is over," IMF chief economist Olivier Blanchard has warned. Sustainable growth for the world will depend, he said, on solving the problem of big imbalances.

The biggest of these, perhaps, is the US trade deficit. It reached $840 billion last year. That's how much America imported, over and above the value of its exports.

Since 2002, as China's exports ramped up, the US trade gap has surged into what some economists see as a danger zone – a size greater than 5 percent of America's gross domestic product. That's way beyond where it was in the 1980s and '90s.

One cause for the trade gap is US financial habits. High federal budget deficits and consumer debt mean that America is forcing itself to borrow overseas – and in effect that means imports must outrun exports. The danger is that other nations will become wary of lending so much, and a messy collapse of the dollar or a spike in US interest rates could result. That would be bad news for the US – and for the rest of the world.

But another cause stems from policies outside the US. Asian nations manage their currency values to promote exports, economists say.

The trade deficit has eased this year, as recession curtails Americans' appetite for Chinese electronics and other goods. But the trade gap could widen again – or at least fail to keep shrinking – absent additional actions by policymakers, economists say.

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