Current Account Deficits in European Emerging Markets

Robert Shelburne

No 2008_2, ECE Discussion Papers Series from UNECE

Abstract: Many of the emerging market economies in Europe are presently running current account deficits which are quite high relative to any global or historical standard and are fundamentally unsustainable. This includes the three poorer European Union (EU) members of the old Europe (Greece, Portugal, and Spain), many of the EU’s new member states (largely the former transition economies which have joined since 2004), most of those non-EU members in south-east Europe, and a number of the CIS economies in eastern Europe and the Caucasus. The unweighted average current account deficit for this group has more than doubled from under four percent of GDP in 2003 to well over eight percent in 2007. This trend is significantly different than what has evolved in many of the world’s other emerging markets; these other economies have generally been running current account surpluses. This paper documents this development, describes the underlying factors that have brought it about, assesses the underlying vulnerability that has been created, and discusses the implications of this development for other emerging markets and global financial stability more generally. In addition, how these risks have evolved since the appearance of the global credit crisis beginning in the summer of 2007 is examined.

Keywords: Current Account; Energing Markets; Europe; financing; development; transition economies; vulnerability; capital inflows (search for similar items in EconPapers)
JEL-codes: F21 F32 F36 O11 O16 O52 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2008-06
New Economics Papers: this item is included in nep-eec and nep-tra
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Citations: View citations in EconPapers (11)

Published in UNECE Discussion Paper Series, No. 2008_2

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http://www.unece.org/fileadmin/DAM/oes/disc_papers/ECE_DP_2008-2.pdf First version, 2008 (application/pdf)

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Working Paper: Current Account Deficits in European Emerging Markets (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ece:dispap:2008_2

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