The relationship “foreign economic activity risks – current account” as an indicator of economic imbalance in the country

Abstract

Active foreign economic activity is one of the factors ensuring the stability of the country`s economy. At the same time, the possibility of increasing foreign economic potential is determined by both macroeconomic risks of the globalised economy and indicators of macroeconomic imbalance. The purpose of the study is to build a methodological basis for assessing the risks of foreign economic activity of Ukrainian resident companies, taking into account the likelihood of economic crises in the countries of operation of partner companies. The methodology of the study is based on the method of economic time series analysis, taking into account the indicators and standards of the Macroeconomic Imbalance Procedure adopted by the European Commission in the practice of monitoring economic crises in the European Union. The results of the study show that the basic category for determining the country`s balance of payments and the indicator that demonstrates the presence of imbalances in the economy is the current account balance.  In order to predict future economic crises, it is important not only to calculate the value of the current account, but also the volatility of this indicator, i.e., fluctuations over time over a certain defined observation horizon. According to the analysis, the countries with the best risk/imbalance ratio are France, Belgium, and Austria, which had no imbalance in this indicator in 2014-2023 and whose current account balance volatility is comparable to the European average. Conclusions. The reliability of counterparty companies in foreign economic activity, which is also characterised by the stability of the country's economy, is determined, in particular, by the volatility of the current account indicator. A higher value of the indicator in Ukraine compared to partner countries cannot yet be a reason to refuse cooperation, but it is a strong argument for taking into account the risks of such cooperation. In general, the volatility of the current account balance indicator is a problem for Ukraine, which indicates an unpredictable economic situation and increases the risks of foreign economic activity.