Pandemic, War, and Global Imbalances | 2022 IMF External Sector Report

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Global current account balances widened in 2021 to 3.5 percent of world GDP.
The IMF’s multilateral approach indicates 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 current account balances unevenly through the travel and transportation sectors and 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; the war in Ukraine is exacerbating this trend in 2022.

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.
Global excess balances narrowed to 0.9 percent of world GDP in 2021 compared with 1.2 percent of world GDP in 2020.
Medium-term outlook: gradual narrowing of global current account balances as:
- the impact of the pandemic fades away,
- commodity prices normalize,
- fiscal consolidation in current account deficit economies progresses.
The outlook is highly uncertain and subject to several risks.

Policies to promote external rebalancing differ with positions and needs of individual economies.
The report emphasizes the role of policy coordination, burden sharing, and countries’ structural characteristics in shaping outcomes (noting these themes within the chapter on Climate Policies and External Adjustment).

Model-based analysis of a “net-zero emissions by 2050” scenario examines how climate change mitigation policies—carbon tax, green subsidy, and infrastructure investment—could impact external balances over the next decade.
The analysis examines the role of policy coordination, burden sharing, and countries’ structural characteristics.

The overview chapter presents the evolution, outlook, and risks stemming from global external positions and summarizes the 2021 external assessments for a globally representative set of economies.
Individual economy assessments use a wide range of methods to form an integrated and multilaterally consistent view of economies’ external sector positions.
Supporting materials include the Full Report, Executive Summary, External Balance Assessment, Chapter 2 Data (External Positions and Policies), Chapter 1 Data, an online annex, and 2021 Individual Economy Assessments.

External Sector Report — Pandemic, War, and Global Imbalances, August 2022