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International Investment Position of
Poland and the Czech Republic
Elkoumy/ Reinkemeier -Poland/Czech Republic 125.02.2009
Fakultät Wirtschaftswissenschaften
Lehrstuhl für Wachstums- und Konjunkturtheorie
Prof. Dr. Thomas Gries
Sherif Elkoumy and Johanna Reinkemeier
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda
• Stylized Facts
• International Investment Position of Czech Republic
Elkoumy/ Reinkemeier -Poland/Czech Republic 225.02.2009
•IIP of Poland
•Conclusion• International Investment Position of Poland
• Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland and Czech Republic
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
Czech Republic Poland
Population 10 million 38 million
GDP $175bn $420bn
Elkoumy/ Reinkemeier -Poland/Czech Republic 325.02.2009
•IIP of Poland
•Conclusion
GDP $175bn $420bn
Average real
GDP growth
rate 2003-08
4.3% 4.4%
Currency koruna zloty
EU membership: Since 01/2004
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland and Czech Republic
Inflation Rates of Poland and the Czech Republic
0
1020
30
40
1994
1996
1998
2000
2002
2004
2006
2008
YearIn
fla
tio
n r
ate
(%
)
Czech Republic
Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
Elkoumy/ Reinkemeier -Poland/Czech Republic 425.02.2009
•IIP of Poland
•Conclusion ü high inflation rates of Poland in the 80s and 90s
Ł revaluation with factor 1:10,000 in 1995
ü Afterwards stabilization thanks to strict monetary
policy of the Polish central bank
ü Czech koruna has been one of the most stable
currencies in Central and Eastern Europe
Ł Aims to adopt Euro in 2011 (Poland) and 2012
(Czech R.)
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland and Czech Republic
Net International Investment Positions of Poland and the Czech
Republic 1993-2008 (stocks in millions of USD)
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
Elkoumy/ Reinkemeier -Poland/Czech Republic 525.02.2009
•IIP of Poland
•Conclusion
Ł Czech Republic and Poland are both debtor nations
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
International Investment Position of the Czech Republic
International Investment Position of the Czech Republic
40000
60000
80000
100000
120000
140000
160000
180000
200000
IIP Total Assets:
(Millions of USD)
IIP Total Liabilities:
(millions of Us$)
Elkoumy/ Reinkemeier -Poland/Czech Republic 625.02.2009
•IIP of Poland
•Conclusion0
20000
1993 1995 1997 1999 2001 2003 2005 2007
Ł Domestic liabilities increase at a faster pace than domestic
assets
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
International Investment Position of the Czech Republic
100%
Structure of the investment position assets and liabilities:
• IIP deficit of $68,600m in 2008 (37.8% of GDP)
• Deficit mainly due to FDI into the Czech economy
• High share of foreign portfolio investment assets in Czech
Republic
Elkoumy/ Reinkemeier -Poland/Czech Republic 725.02.2009
•IIP of Poland
•Conclusion
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Assets Liabilities
Other
Government
Czech National Bank
Commercial Banks
Portfolio Investment
Foreign Direct
Investment
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
International Investment Position of the Czech Republic
Development of Direct Investment
0
20000
40000
60000
80000
100000
120000
Czech FDI Stocks
Abroad: (millions of
USD)
FDI Stocks in Czech
Republic (millions of
USD)
Elkoumy/ Reinkemeier -Poland/Czech Republic 825.02.2009
•IIP of Poland
•Conclusion
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Development of Portfolio Investment
0
5000
10000
15000
20000
25000
30000
35000
40000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Portfolio Investment
Assets (millions of
USD)
Portfolio Investment
Liab (millions of
USD)
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
International Investment Position of the Czech Republic
Accumulation of Reserves
• official reserve assets: $34,922m (12/2008)
Stock of Foreign Reserves in the Czech Republic (millions of USD)
10000
1500020000
2500030000
3500040000
Elkoumy/ Reinkemeier -Poland/Czech Republic 925.02.2009
•IIP of Poland
•Conclusion0
500010000
Ł Czech Republic accumulates foreign reserves to
maintain the koruna´s undervaluation
(estimations: +15%)
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
International Investment Position of the Czech Republic
Balance of Payments
-4000
-2000
0
2000
4000
6000
8000
10000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Current Account
in millions of
Us$ /flows
Balance on
Goods &
Services in
Elkoumy/ Reinkemeier -Poland/Czech Republic 1025.02.2009
•IIP of Poland
•Conclusion -8000
-6000
-4000 Services in
millions of Us$
Ł Current account deficits due to huge income
deficits
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• IIP of Poland recorded an increse in deficit for the last 15 years
• Net foreign acquisition of financial assets in Poland exceeds net
Poland acquisitions of financial assets abroad
Elkoumy/ Reinkemeier -Poland/Czech Republic 1125.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Net Position recorded net Liabilities of around 242 B.$ at yearend 2007, compared with 166 B.$ at yearend 2006
•The deficit represented 43.8% of GDP at yearend 2007 compared with 33% at yearend 2006.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1225.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Direct Investment
ü DI Assets and Liabilities increased for the four consecutive years.
ü High share of Direct Investment in reporting economy (liabilities) . about 31% of GDP
Elkoumy/ Reinkemeier -Poland/Czech Republic 1325.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Direct Investment
üNet Position of Direct Investment recorded net Liabilities, an increase in deficit of about 156 B.$ at yearend 2007,compared with 111 B.$ at yearend 2006. üRelative high interest rate in average 5%ü Increasing equity/shares capital and reinvested earnings .
Elkoumy/ Reinkemeier -Poland/Czech Republic 1425.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Portfolio Investment
ü The observable rise in Liabilities is due to rising acquisitions of domestic equity and debt securities and Purchases the bonds and notes issued by the Gov.
üBonds and notes represented 70% of PI Liabilities.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1525.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Portfolio Investment (Net Position)
ü recorded net liabilities, an increase in deficit about 83 B.$ at yearend 2007,compared with 70 B.$ at yearend 2006.ü The deficit represented 15% of GDP.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1625.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Financial Derivatives
ü Net Liabilities, an increase in deficit of about 292 m.$ at yearend 2007, compared with 68 m.$ at yearend 2006.
üDerivatives Markets were established in the period 2003-2004. an observable increase in lequidity of interest rate and FX derivatives traded on OTC.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1725.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Other Investment
ü Net Liabilities of about 67 B.$ at yearend 2007, due to increasing Loans which represented 70% of OI liabilities and Trade credits.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1825.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
International Investment Position of Poland
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
• Reserve Assets
üNet Assets 65 B.$ at yearend 2007 (Compare Czech Republic: 35 B. $), to meet the country´s BOP needs.
ü Foreign exchange represented 83% of total Reserve Assets due to continously incresing in Export.
Elkoumy/ Reinkemeier -Poland/Czech Republic 1925.02.2009
•IIP of Poland
•Conclusion
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Conclusion
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland
ü IIP deficit mainly due to FDI into the Czech economy and the Polish economy.
ü High share of foreign portfolio investment assets in Czech Republic, conversely high share of foreign portfolio Investment liabilities in Poland.
ü The deficit in IIP of Poland represented 43.8% of GDP, and 34.4% of GDP in the Czech R.
Elkoumy/ Reinkemeier -Poland/Czech Republic 2025.02.2009
•IIP of Poland
•Conclusion
34.4% of GDP in the Czech R.
Prof. Dr. Thomas GriesProf. Dr. Thomas Gries
Agenda:
•Stylized Facts
•IIP of Czech
Republic
•IIP of Poland Thank you for your attention!
Elkoumy/ Reinkemeier -Poland/Czech Republic 2125.02.2009
•IIP of Poland
•Conclusion
Thank you for your attention!