## 2017 External Sector Report

## Source details

**Canonical URL:** [2017 External Sector Report](https://www.imf.org/en/publications/policy-papers/issues/2017/07/27/2017-external-sector-report)

## Other formats

- [Markdown version](/en/publications/policy-papers/issues/2017/07/27/2017-external-sector-report/index.md)
- [Structured JSON version](/en/publications/policy-papers/issues/2017/07/27/2017-external-sector-report/index.json)
- [Bundle manifest](/en/publications/policy-papers/issues/2017/07/27/2017-external-sector-report/bundle-manifest.json)

## Bibliographic details
- Published: July 28, 2017

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### Key findings and overview
- Global current account imbalances were broadly unchanged in 2016, with minor shifts adding to the reconfiguration under way since 2013.
- The fall in commodity prices, uneven cyclical recoveries in systemic economies, and differences in policy responses contributed to the rotation of imbalances.
- Current account surpluses of oil-exporting economies, as a group, shifted from large surpluses to small deficits, while deficits in emerging and developing economies narrowed markedly.
- Surpluses and deficits in key advanced economies widened in 2016.
- These trends were generally supported by real exchange rate movements.
- Overall excess current account imbalances (i.e., deficits or surpluses that deviate from desirable levels) represented about one-third of total global imbalances in 2016, remaining broadly unchanged since 2013, although increasingly concentrated in advanced economies.

### Changes by country group and notable cases
- Emerging and developing economies: excess imbalances narrowed, led by a smaller excess surplus in China and smaller excess deficits in Brazil, Indonesia, South Africa, and Turkey.
- Advanced economies: widening of excess imbalances in some cases; persistence of large excess surpluses in Germany, Korea, the Netherlands, Singapore, and Sweden.
- Rotation of excess imbalances toward advanced economies, with deficits increasingly concentrated in the United States and United Kingdom.

### Risks and systemic implications
- Persistent global excess imbalances suggest that automatic adjustment mechanisms are weak.
- Rotation of excess imbalances toward advanced economies likely entails lower deficit-financing risks in the near term, but increased concentration of deficits in a few economies carries greater risks of disruptive trade policy actions.
- Diverging stock positions coupled with continued overreliance on demand from debtor countries could pose risks to global growth and raise the likelihood of disruptive adjustments down the road.

### Policy recommendations
- Recalibrate the policy mix in both deficit and surplus economies to address external imbalances in a growth-friendly fashion, particularly given nearly-closed output gaps in most systemic economies.
- Excess deficit countries:
  - Move forward with fiscal consolidation.
  - Gradually normalize monetary policy in tandem with inflation developments.
- Excess surplus countries with fiscal space:
  - Reduce reliance on easy monetary policy.
  - Allow for greater fiscal stimulus.
- Where monetary policy is constrained (e.g., individual euro area members): prioritize fiscal and structural policies to facilitate relative price adjustments.
- Structural policies in excess surplus countries: focus on lifting distortions that constrain domestic demand or limit trade competition.
- Structural policies in excess deficit countries: focus on improving external competitiveness and overall saving.
- Avoid protectionist and mercantilist policies as they are detrimental to global growth.

*Source: 2017 External Sector Report, July 28, 2017.*

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## Content in this bundle

- **2017 External Sector Report**
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  - [2017 External Sector Report (PDF)](/-/media/files/publications/pp/2017/2017-external-sector-report.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/policy-papers/issues/2017/07/27/2017-external-sector-report_