External Sector Report 2024: Imbalances recede

Chapter 1: External Positions and Policies

The strength of the US dollar continued in 2023, with the currency remaining near its post-2000 peak. Net capital inflows to emerging markets remained negative in 2023, although they improved slightly compared to 2022, driven by net outflows from China. The global current account balance narrowed significantly in 2023, easing towards pre-COVID-19 levels. This narrowing reflected a reversal of large current account surpluses in commodity-exporting countries as commodity prices fell. This was also supported by the continued recovery from the COVID-19 pandemic and a slowdown in global merchandise trade in 2023. The global current account balance is expected to narrow slightly in 2024 and over the medium term as CA deficit countries undertake fiscal consolidation and commodity prices moderate. The staff assessment suggests that global current account surpluses remain broadly unchanged from 2022.