Abstract

The external sector assessments use a wide range of methods, including the External Balance Assessment (EBA) developed by the IMF’s Research Department to estimate desired current account balances and real exchange rates (see IMF Working Paper WP/13/272 for a complete description of the EBA methodology and Annex I of the 2015 External Sector Report for a discussion of more recent refinements). This year, as is done periodically, the EBA models were refined to reflect insights gained since the last round of changes. Refinements aimed at better capturing the role that certain fundamentals (demographics, institutions and potential current account measurement biases), macroeconomic policies (foreign exchange intervention and credit excesses) and other structural features could play in driving current account dynamics. A full description of the refinements can be found in the 2018 ESR Technical Supplement.