The paper presents a comparative analysis of the sustainability of current account deficits in selected Central and Eastern European countries (Poland, the Czech Republic, Hungary) as well as Southern and Western European countries (Portugal, Spain, Greece) in the period 1995-2004. The author verifies the sustainability of high current account deficits based on the observation of selected macroeconomic variables such as investment and saving rate, structure of capital inflows, openness ratio, reserve assets. The main finding of the investigation is that the sustainability of negative current balances as measured by operational indicators seems to have been lower in SWE than in CEE countries. The author claims that this might prove that foreign investors are willing to accept such low levels of sustainability indicators in more developed countries and that would pose a threat of reversals in less developed countries. Based on the experience of SWE countries the author suggests that deficits prevailing in Poland, the Czech Republic and Hungary will be more sustainable as the convergence process advances (and especially after EMU accession).

Keywords: current account, deficit sustainability, international investment position, European countries

  Konrad Sobański, Comparative analysis of the sustainability of current account deficits in selected European countries (1995-2004) - plik pdf; (259 KB)