## 2023 External Sector Report: External Rebalancing in Turbulent Times

## Source details

**Canonical URL:** [2023 External Sector Report: External Rebalancing in Turbulent Times](https://www.imf.org/en/publications/esr/issues/2023/07/19/2023-external-sector-report)

## Other formats

- [Markdown version](/en/publications/esr/issues/2023/07/19/2023-external-sector-report/index.md)
- [Structured JSON version](/en/publications/esr/issues/2023/07/19/2023-external-sector-report/index.json)
- [Bundle manifest](/en/publications/esr/issues/2023/07/19/2023-external-sector-report/bundle-manifest.json)

## Bibliographic details
- Published: July 19, 2023

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### 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.*

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## Content in this bundle

- **Chapter 1**
  - [Chapter 1 (Markdown version)](/-/media/files/publications/esr/2023/english/ch1.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 1 (PDF)](/-/media/files/publications/esr/2023/english/ch1.pdf){rel="external" type="application/pdf"}
- **Chapter 1 Annex**
  - [Chapter 1 Annex (Markdown version)](/-/media/files/publications/esr/2023/english/ch1annex.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 1 Annex (PDF)](/-/media/files/publications/esr/2023/english/ch1annex.pdf){rel="external" type="application/pdf"}
- **Chapter 2**
  - [Chapter 2 (Markdown version)](/-/media/files/publications/esr/2023/english/ch2.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 2 (PDF)](/-/media/files/publications/esr/2023/english/ch2.pdf){rel="external" type="application/pdf"}
- **Chapter 2 Annex**
  - [Chapter 2 Annex (Markdown version)](/-/media/files/publications/esr/2023/english/ch2annex.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 2 Annex (PDF)](/-/media/files/publications/esr/2023/english/ch2annex.pdf){rel="external" type="application/pdf"}
- **Chapter 3**
  - [Chapter 3 (Markdown version)](/-/media/files/publications/esr/2023/english/ch3.pdf.md){rel="alternate" type="text/markdown"}
  - [Chapter 3 (PDF)](/-/media/files/publications/esr/2023/english/ch3.pdf){rel="external" type="application/pdf"}
- **Full Report**
  - [Full Report (Markdown version)](/-/media/files/publications/esr/2023/english/text.pdf.md){rel="alternate" type="text/markdown"}
  - [Full Report (PDF)](/-/media/files/publications/esr/2023/english/text.pdf){rel="external" type="application/pdf"}

---

## References

- [Panel Discussion](https://www.imf.org/en/Videos/view?vid=6331453040112)
- [Chapter 2 Blog](https://www.imf.org/en/blogs/articles/2023/07/19/emerging-market-economies-bear-the-brunt-of-a-stronger-dollar)
- [Charts and Data](https://www.imf.org/-/media/files/publications/esr/2023/english/data/esr2023-ch01.zip)
- [Charts and Data](https://www.imf.org/-/media/files/publications/esr/2023/english/data/esr2023-ch02-ecos.zip)

_Source: https://www.imf.org/en/publications/esr/issues/2023/07/19/2023-external-sector-report_