Project Syndicate – Jim O’Neill: “In the decade since the collapse of Lehman Brothers and the start of the global financial crisis, the world economy has registered stronger growth than many realize, owing in large part to China. But in the years ahead, global economic imbalances and troubling trends in the business world will continue to pose economic as well as political risks….Following the crisis, I predicted that the US and China would have to swap places to some extent over the course of the next decade. China needed to save less and spend more; and the US needed to save more and spend less. Judging by their current accounts today, both countries appear to have made significant progress. In 2018, China’s surplus will have fallen to around .5-1% of GDP, which is remarkable considering that its GDP has more than doubled since 2008. Equally remarkable, the US will register a deficit of 2-2.5% of GDP, which is within the 2-3% range that many economists consider sustainable. Other global indicators, however, are not as encouraging. Back in 2008, the eurozone ran a current-account deficit of 1.5% of GDP, with Germany recording a surplus of around 5.5%. But Germany’s large surplus owed much to large deficits in other eurozone countries, and that imbalance gave rise to the euro crisis after 2009. Worryingly, Germany’s surplus has since ballooned to around 8% of GDP. As a result, the eurozone now has a surplus close to 3.5%, despite, and probably because of, years of weak domestic demand in the Mediterranean member states. This is surely a sign of further instability ahead. In fact, the slow-brewing crisis in Italy may be a harbinger of what awaits the bloc…”