The evolution of external stock imbalances in central and east european countries

Purpose: The primary purpose of this paper is to examine external stock positions of Central and Eastern European (CEE) economies from the viewpoint of external sustainability risks in the aftermath of global financial crisis (GFC). Design/Methodology/Approach: Research method applied in this study includes the overview of theoretical concepts, literature review and a comparative analysis based on statistical data. Findings: The results of research show that since the end of the GFC stock imbalances of CEE countries has fallen towards safer levels. As a result, the external sectors of these economies appear more resilient to sudden stops in external financing. However, external sustainability concerns remain about external debt levels, especially in Hungary and Romania. Practical Implications: Identifying potential risks to external sustainability is essential for designing appropriate economic policies that can prevent excessive foreign indebtedness and strengthen the resilience. The research results can be used to formulate economic policy, which influence the scale and the composition of external assets and liabilities, both in gross and net terms and help to minimalize external sustainability risks. Originality/Value: While the analysis of external stock positions is well-documented in the literature for the euro area, similar studies focusing specifically on CEE countries remain limited. This paper aims to fill this gap by providing a comprehensive assessment of the external asset and liability positions in this region. Keywords: stock imbalances, international investment position, CEE countries. JEL classification: F34. Paper type: Research study.