The International Monetary Fund recently said the COVID-19 outbreak could further narrow global current account imbalances and warned that a new large outbreak of COVID-19 could increase the risk of external debt crises in emerging and developing economies.

Washington, Aug 4 (Reuters) - The COVID-19 outbreak may narrow global current account imbalances by 2020 as trade growth slowed, but some commodity exporters and countries dependent on tourism will shift to current account deficits, the IMF said on Thursday.

The IMF's External Sector Report on currencies and imbalances in the world's 30 largest economies shows the net balance of the current account fell 0.2 percentage points to 2.9 per cent of global gross domestic product last year.

It forecast that the net current account balance would shrink by a further 0.3 percentage points in 2020, partly because of large fiscal and monetary stimulus programmes in many countries and persistent trade pressures.

"Major commodity exporters should see that their current accounts have moved from large surpluses to serious deficits," IMF chief economist Geeta Gopinath said in the report, which was broadcast live online.

It forecasts that Saudi Arabia, which had a current account surplus of 5.9 per cent of GDP last year, will run a deficit of 4.9 per cent this year as a result of plunging oil prices and demand. The report also showed that Thailand and Malaysia, which depend on tourism, will see their current account surpluses shrink significantly by 2020.

The IMF said the current account deficit in dollar terms was 2.3 percent of GDP last year, slightly below the level required by economic fundamentals, and could narrow to 2.0 percent this year. But the report estimates that the real effective exchange rate was overvalued by about 11 per cent last year.

According to the Financial Times website on August 4, THE IMF4 warned on The 4th that a large new outbreak of COVID-19 could increase the risk of external debt crises in emerging and developing economies, which are vulnerable to sudden capital outflows.

In its annual assessment of global imbalances, the IMF said the cost to oil exporters such as Norway, Russia and Saudi Arabia could exceed 3% of GDP. In countries such as Costa Rica, Morocco and Portugal, the loss of tourism revenues could exceed 2 per cent of GDP, while countries such as Guatemala, Pakistan and Egypt would be hardest hit by the decline in remittances.

The report's authors, Martin Kaufman and Daniel Leigh, wrote: "Shocks of this magnitude are likely to have lasting effects and require significant economic adjustment." Allowing currencies to depreciate would be the best way to adapt to these shocks, where feasible, but currency intervention or capital controls might be needed in some cases, the IMF said.

The IMF said the renewed outbreak of coVID-19 is putting new strains on financial markets and could plunge countries that already have large current account deficits, high foreign-currency debt or low reserves into crisis, forcing them to default on their debts or call for more IMF support.