2024 External Sector Report: Imbalances Receding
Source details
- Canonical URL
- 2024 External Sector Report: Imbalances Receding
Other formats
Bibliographic details
- Published: July 12, 2024
Overview
- External sector assessment covers 30 of the world’s largest economies based on their 2023 data.
- With tight monetary policy conditions in key advanced economies continuing in 2023:
- the US dollar remained strong in 2023 and early 2024 by historical standards.
- other reserve currency movements have been mixed.
- Net capital inflows to emerging market and developing economies:
- recovered slightly from the lows experienced in 2022 but remained negative in 2023.
- gross inflows and outflows in emerging markets declined in 2023.
- Global current account balance developments:
- the global current account balance (defined as the cross-country sum of absolute values of current account) narrowed significantly in 2023.
- the excess global current account balance (in excess of the current account norms) has remained broadly unchanged relative to 2022.
- The report analyzes historical external sector implications of energy price swings and discusses policy measures to soften negative oil supply shock impacts as well as implications of the clean energy transition and evolving oil price–US dollar correlation.
Chapter 1: External Positions and Policies — Key Findings
- The US dollar strength persisted in 2023, with the currency remaining close to its post-2000 peak.
- Net capital inflows to emerging markets:
- remained negative in 2023, albeit recovering slightly relative to 2022, driven by net outflows from China.
- Global current account balance:
- narrowed significantly in 2023, moderating toward pre-COVID-19 levels.
- narrowing reflected a reversal of large current account surpluses in commodity exporting countries as commodity prices declined.
- continued recovery from the COVID-19 pandemic and a slowdown in global trade in goods during 2023 also contributed.
- Outlook:
- In 2024 and over the medium term the global current account balance is expected to narrow slightly more, as CA deficit countries embark on fiscal consolidation and commodity prices moderate.
- Staff assessment suggests excess global current account balances remained broadly unchanged since 2022.
Chapter 2: Navigating the Tides of Commodity Prices — Key Findings and Policy Options
- Commodity prices show large and recurrent volatility.
- The chapter differentiates drivers behind price swings and accounts for countries’ energy importer or exporter status.
- Energy-importing economies:
- are exposed to adverse effects of negative oil supply shocks.
- can adopt several policy tools to mitigate adverse effects.
- Emerging challenges identified:
- implications of the clean energy transition.
- possible shift in the correlation between the oil price and the US dollar.
Chapter 3: 2023 Individual Economy Assessments — Methodology and Policy Discussion
- Individual economy assessments use a wide range of methods to form integrated and multilaterally consistent views of external positions.
- Methods are grounded in the latest vintage of the External Balance Assessment (EBA) to estimate desired current account balances and real exchange rates.
- Assessments combine model estimates and discussions on policy distortions with a holistic view of other external indicators.
- Policy discussion highlights policies and reforms that contribute to convergence toward (or maintenance of) external balance.
2024 External Sector Report: Imbalances Receding, July 2024.
Content in this bundle
- Chapter 1 Data
- Chapter 2 Data
- Chapter 1
- Chapter 2
- Chapter 2 Annex
- Chapter 3
- Full Report