2017 External Sector Report

Source details

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.

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.

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.

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.

2017 External Sector Report
- 2017 External Sector Report (Markdown version)
- 2017 External Sector Report (PDF)