Weekend Read: The IMF's Latest External Sector Report | First Deputy Managing Director Gopinath to Return to Harvard

In today's edition, we highlight:

• The IMF's latest External Sector Report

• First Deputy Managing Director Gita Gopinath to rejoin the Harvard economics faculty

• F&D Magazine Profile: Agustín Carstens

• Newsletter: Caucasus and Central Asia

• Podcast: Karen Dynan on regaining lost ground in policy influence

• World Economic Outlook Update on July 29

EXTERNAL BALANCE ASSESSMENT

The IMF's Latest External Sector Report

Global current account balances widened by a sizable 0.6 percentage points of world GDP in 2024. When adjusted to account for the volatility around the pandemic and Russia’s war in Ukraine, the widening is a notable reversal of the narrowing since the global financial crisis and may signal a significant structural shift. The IMF’s just-released 2025 External Sector Report (ESR) presents the latest assessment of these imbalances for the 30 largest economies, representing about 90 percent of world output. This assessment constitutes a key part of the IMF’s mandate to encourage the balanced expansion of trade and economic growth and promote international monetary cooperation, writes the Fund’s Pierre-Olivier Gourinchas in a new blog.

“It is important to note at the outset that external surpluses or deficits need not be a problem and can be desirable to a degree,” says Gourinchas. “For instance, it is desirable for young or rapidly growing economies to finance part of their economic development with foreign capital. Conversely, older or less dynamic economies may need to save more and can obtain higher returns from cross-border investments.”

The ESR has the difficult task of assessing when current account balances are broadly appropriate—that is, consistent with country fundamentals and desirable policies—and when they become excessive, signaling potential risks down the line for individual countries or the global economy. Both excessive deficits and surpluses can be sources of risks, Gourinchas notes.

IMF MANAGEMENT

First Deputy Managing Director Gita Gopinath to Return to Harvard

IMF First Deputy Managing Director Gita Gopinath  will leave the Fund at the end of August to return to Harvard University, where she will be the inaugural Gregory and Ania Coffey Professor of Economics in the Department of Economics, said IMF Managing Director Kristalina Georgieva this week. Gopinath joined the Fund in January 2019 as Chief Economist and was promoted to First Deputy Managing Director in January 2022.

“Gita has been an outstanding colleague—an exceptional intellectual leader, dedicated to the mission and members of the Fund, and a fabulous manager, always showing genuine care for the professional standing and wellbeing of our staff,” said Georgieva, noting that Gopinath came to the Fund as a highly respected academic in macroeconomics and international finance.

Gopinath, the first female Chief Economist in IMF history, expressed her gratitude for her time at the Fund. “I am especially thankful to Kristalina and her predecessor, Christine Lagarde, for the once-in-a-lifetime opportunity to serve the IMF’s membership during a period of unprecedented challenges. I now return to my roots in academia, where I look forward to continuing to push the research frontier in international finance and macroeconomics to address global challenges, and to training the next generation of economists.”

A successor to Gopinath is expected to be named by the Managing Director in due course.

F&D MAGAZINE

Agustin Carstens: The Innovative Central Banker

When he was a child, Agustín Carstens’ mother would give him the exact bus fare to school and back every morning. One afternoon, he had to walk several kilometers across Mexico City to get home because fares went up during the day. “I asked what happened, and my mother said, ‘It’s inflation,’” he recounted in an interview with the Fund’s Andreas Adriano. “I was puzzled and thought it would be interesting to understand it better.”

Thus germinated the seed for Mexico’s leading economist and one of the most successful policymakers of this century. Over a four-decade career, Carstens combined intellectual and academic rigor with pragmatism and political ability in a remarkable series of leadership roles at the International Monetary Fund, Mexico’s central bank and finance ministry, and the Bank for International Settlements.

CAUCASUS AND CENTRAL ASIA

Read the Latest CCA Newsletter

Explore the latest economic developments in the Caucasus and Central Asia. The current edition of this IMF newsletter highlights discussions on how these countries can build resilience amid rising global trade tensions and economic uncertainty; shares takeaways from the IMF’s latest annual economic health checks with Georgia and Uzbekistan; and updates on peer-learning and capacity development activities in the region. Read the latest edition here and subscribe here to receive the next edition directly in your inbox each quarter.

There was a time when economic expertise ruled policy debates at virtually all levels of government. And while trade, taxation, and other important policies are still guided by economic analysis, economists increasingly feel sidelined by politics. In her former roles as chief economist at the US Treasury Department and senior economist at the White House Council of Economic Advisers, Harvard professor Karen Dynan has seen too much solid economic research be rejected due to overly dense presentations. In this podcast, Dynan says economists need to engage with policymakers and the public at a level that they can understand if they want to be part of the policy conversation. 

MARK YOUR CALENDAR

JULY 29, 9 AM ET

Launch of July 2025 World Economc Outlook

The World Economic Outlook (WEO) is a survey of prospects and policies by the IMF staff, usually published twice a year, with updates in between. It presents analyses and projections of the world economy in the near and medium term, which are integral elements of the IMF’s surveillance of economic developments and policies in its member countries and of the global economic system.

Thank you very much for your interest in the Weekend Read! Be sure to let us know in the comments what issues and trends we should have on our radar.

Miriam Van Dyck

Editor, IMF Weekend Read