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International Monetary Fund. Research Dept.

Abstract

Global current account balances—the overall size of current account deficits and surpluses—continued to widen in 2021 to 3.5 percent of world GDP, and are expected to widen again this year. The IMF’s multilateral approach suggests that global excess balances narrowed to 0.9 percent of world GDP in 2021 compared with 1.2 percent of world GDP in 2020. The pandemic has continued to affect economies’ current account balances unevenly through the travel and transportation sectors as well as a shift from services to goods consumption. Commodity prices recovered from the COVID-19 shock and started rising in 2021 with opposite effects on the external position of exporters and importers, a trend that the war in Ukraine is exacerbating in 2022. The medium-term outlook for global current account balances is a gradual narrowing as the impact of the pandemic fades away, commodity prices normalize, and fiscal consolidation in current account deficit economies progresses. However, this outlook is highly uncertain and subject to several risks. Policies to promote external rebalancing differ with positions and needs of individual economies.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Produced since 2012, the IMF’s annual External Sector Report analyzes global external developments and provides multilaterally consistent assessments of external positions, including current accounts, real exchange rates, external balance sheets, capital flows, and international reserves, of the world’s largest economies, representing over 90 percent of global GDP. Chapter 1 discusses the evolution of global external positions in 2020, external developments throughout the COVID-19 crisis, and policy priorities for reducing excess imbalances over the medium term. Chapter 2 analyzes how the unprecedented fiscal support provided in response to the COVID-19 crisis has affected external positions at the individual and global level. It also focuses on how withdrawal of such support will impact external positions in the medium term. Chapter 3, “Individual Economy Assessments,” provides details on the different aspects of the overall external assessment and associated policy recommendations for 30 economies. This year’s report and associated external assessments are based on the latest vintage of the External Balance Assessment (EBA) methodology and on data and IMF staff projections as of June 30, 2021.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Produced since 2012, the IMF’s annual External Sector Report analyzes global external developments and provides multilaterally consistent assessments of external positions, including current accounts, real exchange rates, external balance sheets, capital flows, and international reserves, of the world’s largest economies, representing over 90 percent of global GDP. Chapter 1 discusses the evolution of global external positions in 2019, external developments during the COVID-19 crisis, and policy priorities for responding to the crisis and for reducing excess imbalances over the medium term. Chapter 2 analyzes the relationship between the structure of external assets and liabilities—the components of the international investment position—and the risk of external stress events. It also assesses how heightened global risk aversion, as during the COVID-19 crisis, amplifies these risks. Chapter 3, “Individual Economy Assessments,” provides details on the different aspects of the overall external assessment and associated policy recommendations for 30 economies. This year’s report and associated external assessments are based on the latest vintage of the External Balance Assessment (EBA) methodology and on data and IMF staff projections as of July 15, 2020.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

The IMF’s 2019 External Sector Report shows that global current account balances stand at about 3 percent of global GDP. Of this, about 35–45 percent are now deemed excessive. Meanwhile, net credit and debtor positions are at historical peaks and about four times larger than in the early 1990s. Short-term financing risks from the current configuration of external imbalances are generally contained, as debtor positions are concentrated in reserve-currency-issuing advanced economies. An intensification of trade tensions or a disorderly Brexit outcome—with further repercussions for global growth and risk aversion—could, however, affect other economies that are highly dependent on foreign demand and external financing. With output near potential in most systemic economies, a well-calibrated macroeconomic and structural policy mix is necessary to support rebalancing. Recent trade policy actions are weighing on global trade flows, investment, and growth, including through confidence effects and the disruption of global supply chains, with no discernible impact on external imbalances thus far.

International Monetary Fund

Abstract

The External Sector Report presents a methodologically consistent assessment of the exchange rates, current accounts, reserves, capital flows, and external balance sheets of the world’s largest economies. The 2018 edition includes an analytical assessment of how trade costs and related policy barriers drive excess global imbalances.

International Monetary Fund

Abstract

Executive Directors broadly agreed with the findings of the External Sector Report and its policy recommendations. They noted that global current account surpluses and deficits have remained broadly unchanged in recent years. At the same time, the concentration of excess imbalances in advanced economies has increased, on both the surplus and deficit sides, amid a widening of creditor and debtor positions. Directors noted with concern the projected continuation of this trend under baseline policies.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

This overview chapter presents the evolution, outlook, and risks from global external positions and summarizes the external assessments of a globally representative set of economies for 2018, which are also detailed in Chapter 3, “2018 Individual Economy Assessments.” These assessments are multilaterally consistent and draw on inputs fom the latest vintage of the External Balance Assessment (EBA) methodology and consider a full set of external indicators, including current accounts, exchange rates, external balance sheets, capital flows, and international reserves. The chapter’s key objectives and concepts are summarized in Box 1.1

International Monetary Fund. Monetary and Capital Markets Department

Abstract

This overview chapter discusses the evolution of and outlook for global external positions and summarizes the IMF staff’s external assessments for a globally representative set of economies in 2019, which are also detailed in Chapter 3, “2019 Individual Economy Assessments. “ These assessments are multilaterally consistent and draw on the latest vintage of the External Balance Assessment (EBA) methodology and consider a full set of external indicators, including current accounts, exchange rates, external balance sheets, capital flows, and international reserves. The assessments’ objectives and concepts are summarized in Box 1.1. The chapter is organized as follows: the first section, “Global Imbalances before the COVID-19 Crisis,” documents the evolution of current accounts, exchange rates, and international trade in 2019. It also presents IMF staff external sector assessments for 2019, providing a benchmark for assessing external positions as they were before the onset of the COVID-19 pandemic. The second section, “External Developments during the COVID-19 Crisis,” discusses the evolution of exchange rates, international trade in goods and services, capital flows, and current account balances in 2020, drawing on both recent data and IMF staff forecasts. The third section, “Significant Risks to the External Outlook,” discusses the elevated uncertainties and risks currently pertaining to the outlook. The final section, “Policy Priorities,” discusses policy responses for addressing these risks and responding to the crisis as well as reforms to reduce excess imbalances over the medium term in a manner supportive of global growth.

International Monetary Fund. Monetary and Capital Markets Department

Abstract

Produced since 2012, the IMF’s annual External Sector Report analyzes global external developments and provides multilaterally consistent assessments of external positions, including current accounts, real exchange rates, external balance sheets, capital flows, and international reserves, of the world’s largest economies, representing over 90 percent of global GDP. Chapter 1 discusses the evolution of global external positions in 2020, external developments throughout the COVID-19 crisis, and policy priorities for reducing excess imbalances over the medium term. Chapter 2 analyzes how the unprecedented fiscal support provided in response to the COVID-19 crisis has affected external positions at the individual and global level. It also focuses on how withdrawal of such support will impact external positions in the medium term. Chapter 3, “Individual Economy Assessments,” provides details on the different aspects of the overall external assessment and associated policy recommendations for 30 economies. This year’s report and associated external assessments are based on the latest vintage of the External Balance Assessment (EBA) methodology and on data and IMF staff projections as of June 30, 2021.

International Monetary Fund. Research Dept.

Abstract

Global current account balances—the overall size of current account deficits and surpluses—continued to widen in 2021 to 3.5 percent of world GDP, and are expected to widen again this year. The IMF’s multilateral approach suggests that global excess balances narrowed to 0.9 percent of world GDP in 2021 compared with 1.2 percent of world GDP in 2020. The pandemic has continued to affect economies’ current account balances unevenly through the travel and transportation sectors as well as a shift from services to goods consumption. Commodity prices recovered from the COVID-19 shock and started rising in 2021 with opposite effects on the external position of exporters and importers, a trend that the war in Ukraine is exacerbating in 2022. The medium-term outlook for global current account balances is a gradual narrowing as the impact of the pandemic fades away, commodity prices normalize, and fiscal consolidation in current account deficit economies progresses. However, this outlook is highly uncertain and subject to several risks. Policies to promote external rebalancing differ with positions and needs of individual economies.