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Economic Country Risks Emanating from Austria’s International Exposure

Author

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  • Matthias Fuchs

    () (Oesterreichische Nationalbank)

Abstract

Austria’s special role as one of the leading investors in Eastern and Southeastern European growth markets increasingly raises questions on the risk capacity of Austria’s foreign portfolio. Using selected macroeconomic indicators, this article assesses the economic country risk attached to Austria’s external assets. A scoring model facilitates the calculation of individual country risks, which are linked to detailed regional data from the external statistics of the Oesterreichische Nationalbank (OeNB), thus enabling us to draw conclusions on the regional and functional risk structure of Austrian international investment. This reveals that, in capitalweighted terms, the developed and leading financial markets of Europe and the U.S.A. have a far stronger influence on total risk than that of the 12 EU entrants since 2004 (EU-12) or the Eastern and Southeastern European countries. Despite its intensive investment in Eastern Europe, Austria’s international risk largely stems from securities holdings in developed industrialized countries. The EU-12 account for no more than a fifth of capital-weighted risk, while the region of Eastern and Southeastern Europe represents just a tenth of total exposure. Nevertheless, some growth markets, such as Hungary, Poland, the Czech Republic or Russia, already have more impact on Austria’s total risk than some Western European markets. The projection up to 2009 suggests a leveling off in the total risk presented by Austria’s external assets. A generally stable development in the EU-27 is somewhat offset by a more unfavorable risk environment in some European growth markets and in the U.S.A.

Suggested Citation

  • Matthias Fuchs, 2008. "Economic Country Risks Emanating from Austria’s International Exposure," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 3, pages 41-64.
  • Handle: RePEc:onb:oenbmp:y:2008:i:3:b:3
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    File URL: https://www.oenb.at/dam/jcr:8004fc83-2296-4b41-9e2e-7295be68a4aa/mop_2008_3_fuchs_tcm16-92371.pdf
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    More about this item

    Keywords

    country risk; financial integration; portfolio choice; international investment position;

    JEL classification:

    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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