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Trade imbalances animation

Penny Brooks

28th January 2015

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FT Video has a short animation by Martin Wolf explaining why Global Trade Imbalances matter. This could be useful for A2 students, but needs to be used with caution - they will need to be quite clear first on the difference between a trade surplus or deficit and a government surplus or deficit - which is a classic confusion for a great many. They need to understand not only that some countries have vast current account trade surpluses, as shown in this graph from The Economist in 2012, but also that some of those cash mountains are then used to fund buying government debt from countries. To investigate that issue, I suggest two articles; for the UK, try this in the FT about foreign investors selling UK gilts and the other from CNS News about foreign holdings of US Treasury Bills.

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Penny Brooks

Formerly Head of Business and Economics and now Economics teacher, Business and Economics blogger and presenter for Tutor2u, and private tutor