Instead, the burden of correcting external imbalances in the aftermath of the crisis was incurred primarily by “deficit countries”, mainly via the income channel and “internal devaluation”. This asymmetry in external rebalancing has contributed to the great divergence of GDP per capita between the North and the South after 2010.
Therefore, the countries with large current account surpluses could consider taking steps to limit their excessive surpluses. For example, by increasing clean energy public investment, they could both increase potential growth and address climate change, and at the same time generate positive spillover effects on previously “deficit countries”.