2023 External Sector Report: External Rebalancing in Turbulent Times

Source details

Canonical URL

2023 External Sector Report: External Rebalancing in Turbulent Times

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Published: July 19, 2023

Overview

• Title: External Sector Report — External Rebalancing in Turbulent Times
• Date: July 2023
• Context: Amid the war, pandemic, and US monetary tightening, excess imbalances have not narrowed in 2022, while the US dollar appreciated significantly.
• Key observation: Historically, financially driven dollar appreciation had negative spillovers, which could be alleviated by flexible exchange rates.

Global current account balances and drivers

• Global current account balances—the overall size of headline current account deficits and surpluses—widened for a third consecutive year in 2022.
• Main drivers of the widening (2020–22 period):
  • Russia’s invasion of Ukraine.
  • The uneven recovery from the pandemic.
  • The rapid tightening of US monetary policy.
• Projection: Global current account balances are projected to narrow in 2023.
• Additional contributing factors (2020–21 and 2021 developments):
  • The unequal impact of the COVID-19 crisis in 2020–21.
  • The increase in commodity prices fueled by the economic recovery in 2021 and later by supply concerns following Russia’s invasion of Ukraine in 2022.

IMF external sector assessments and external rebalancing

• IMF’s external sector assessments suggest that the overall size of excess current account deficits and surpluses has remained unchanged since 2021, after declining for several years.
• Policy implication: This highlights the importance of efforts in both excess surplus and deficit economies to promote external rebalancing.
• Methodology note: The individual economy assessments use a wide range of methods to form an integrated and multilaterally consistent view of economies’ external sector positions.

Global dollar cycle and spillovers

• Phenomenon: The US dollar appreciation under the “global dollar cycle,” which is driven primarily by global financial risks, has negative spillovers.
• Distribution of effects: Negative real sector spillovers from US dollar appreciations fall disproportionately on emerging markets.
• Mitigation: More flexible exchange rates and better anchored inflation expectations can mitigate these negative spillovers.
• Sectoral impact highlighted: Economic activity and imports are especially affected.

Report structure and related content on the page

• Main components listed:
  • Full Report
  • Panel Discussion
  • Chapter 1: External Positions and Policies (includes Online Annex; Charts and Data)
  • Chapter 2: External Sector Implications of the Global Dollar Cycle (includes Online Annexes)
  • Chapter 3: 2022 Individual Economy Assessments

Source: 2023 External Sector Report: External Rebalancing in Turbulent Times, July 2023.

Content in this bundle

• Chapter 1
  • Chapter 1 (Markdown version)
  • Chapter 1 (PDF)
• Chapter 1 Annex
  • Chapter 1 Annex (Markdown version)
  • Chapter 1 Annex (PDF)
• Chapter 2
  • Chapter 2 (Markdown version)
  • Chapter 2 (PDF)
• Chapter 2 Annex
  • Chapter 2 Annex (Markdown version)
  • Chapter 2 Annex (PDF)
• Chapter 3
  • Chapter 3 (Markdown version)
  • Chapter 3 (PDF)
• Full Report
  • Full Report (Markdown version)
  • Full Report (PDF)

References

• Panel Discussion
• Chapter 2 Blog
• Charts and Data
• Charts and Data