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Vulnerabilities in Emerging Southeastern Europe—How Much Cause for Concern?

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  • International Monetary Fund

Abstract

While large inflows of capital into Southeastern Europe (SEE) have raised incomes, this has increased vulnerability to financial risks, which, if realized, can lead to costly adjustments. Traditional vulnerability indicators in SEE have reached levels that in other countries have not been sustainable, and sectoral analysis shows rising imbalances and raises questions about efficient use of the inflows. While factors related to EU integration mitigate these vulnerabilities, weaker institutions reduce these benefits in SEE compared to more advanced European emerging markets. To insure against setbacks to income convergence, SEE policymakers should take measures to reverse the buildup of vulnerabilities.

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  • International Monetary Fund, 2007. "Vulnerabilities in Emerging Southeastern Europe—How Much Cause for Concern?," IMF Working Papers 2007/236, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/236
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    2. Andrea M Maechler & Srobona Mitra & Delisle Worrell, 2010. "Decomposing Financial Risks and Vulnerabilities in Emerging Europe," IMF Staff Papers, Palgrave Macmillan, vol. 57(1), pages 25-60, April.
    3. Degryse, Hans & Havrylchyk, Olena & Jurzyk, Emilia & Kozak, Sylwester, 2012. "Foreign bank entry, credit allocation and lending rates in emerging markets: Empirical evidence from Poland," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2949-2959.
    4. MASUJIMA Yuki, 2019. "Time-Variant Safe-Haven Currency Status and Determinants," Discussion papers 19048, Research Institute of Economy, Trade and Industry (RIETI).
    5. Dumitru, Ionut & Dumitru, Ionela, 2009. "An Assessment of the Current Account Sustainability in Romania – An Inter-temporal Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 6(2), pages 23-41, June.
    6. MASUJIMA Yuki, 2017. "Safe Haven Currency and Market Uncertainty: Yen, renminbi, dollar, and alternatives," Discussion papers 17048, Research Institute of Economy, Trade and Industry (RIETI).
    7. Brown, Martin & Ongena, Steven & Yesin, Pinar, 2011. "Foreign currency borrowing by small firms in the transition economies," Journal of Financial Intermediation, Elsevier, vol. 20(3), pages 285-302, July.
    8. Bas B Bakker & Leslie Lipschitz, 2011. "Monetary Policy Challenges in the CESEE Region: Architecture for an Earthquake Zone," Chapters, in: Ewald Nowotny & Peter Mooslechner & Doris Ritzberger-Grünwald (ed.), Post-Crisis Growth and Integration in Europe, chapter 11, Edward Elgar Publishing.
    9. Mr. Rupert D Worrell & Andrea M. Maechler & Ms. Srobona Mitra, 2007. "Decomposing Financial Risks and Vulnerabilities in Eastern Europe," IMF Working Papers 2007/248, International Monetary Fund.

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