Today, I will talk about two types of global economic imbalances. The first relates to the way that savings and investment are being distributed across countries in an increasingly uneven way. The second is the possibility that, over the next couple of decades, the global economy might face a protracted period in which desired savings exceed planned investment, partly because of demographic trends.
If economic policy-makers do not take appropriate measures quickly enough, there is even a risk-albeit a small one-that the world economy could end up with the classic dilemma-first spelled out by John Maynard Keynes-of widespread demand deficiency and a persistent deflationary gap.