DP1509 | Current Account Sustainability: Selected East Asian and Latin American Experiences

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A number of developing countries have run large and persistent current account deficits in both the late-1970s/early-1980s and in the early-1990s, raising the issue of whether these persistent imbalances are sustainable. This paper puts forward a notion of current account sustainability and compares the experience of three Latin American countries ? Chile, Colombia and Mexico ? and three East Asian countries ? Korea, Malaysia and Thailand. It identifies a number of potential sustainability indicators and discusses their usefulness in predicting external crises.