IMF External Sector Reports

Last Updated: July 24, 2018

External Sector Reports

The External Sector Report analyzes global external developments and provides updated staff assessments of economies’ external positions, including current account balances, real exchange rates, external balance sheets, capital flows, and international reserves. The report, which currently covers 29 of the world’s largest economies plus the euro area (representing over 85 percent of global GDP), comprises two papers: (i) an overview paper that emphasizes multilateral issues, showing how individual economies fit into the global picture and discussing associated risks and policies needed to reduce excess imbalances; and (ii) an accompanying Individual Economy Assessments paper, which provides details of the external assessment of each economy. In addition, the 2018 report includes a technical supplement describing in-depth the refinements undertaken in 2018 to reflect the insights gained since the last (2015) round of changes.

The External Sector Report, produced annually since 2012, has become a key part of the IMF’s surveillance. External assessments are arrived at by integrating multilateral and country-specific perspectives, while ensuring individual economy assessments add up to a coherent, multilaterally consistent view. Specifically, staff assessments draw on estimates from the External Balance Assessment approach as well as country-specific evidence and judgment, while acknowledging the uncertainties inherent in such assessments. For a more in-depth discussion on how external assessments are conducted see IMF Blog on Assessing Global Imbalances: The Nuts and Bolts.

External Balance Assessment Approach

The External Balance Assessment (EBA) approach, and its different vintages, is used as an input to the staff assessments of current accounts and real exchange rates. The objective of the EBA approach is to inform a normative evaluation, taking account of the effects of policies and potential policy distortions. In contrast to analyses that seek to predict future values of current accounts and exchange rates, EBA seeks to identify levels that would be consistent with country fundamental characteristics and desirable settings of relevant policies. EBA strips out the influence of cyclical factors and allows one to estimate the impact on a country's current account and real exchange rate of potential policy distortions in the areas of fiscal policy, social protection (public health expenditure in particular), capital controls, reserve accumulation, financial policies, and monetary policy. The approach estimates the impact of both domestic and foreign influences on an economy’s current account and exchange rate.

The data inputs and estimates of the EBA model are available online

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