Skopje, 11 February 2023
The current geopolitical developments can have long-term consequences on globalization, and it can adversely affect especially the less developed economies. This was emphasized by the Governor Angelovska Bezhoska, who led the discussions at the panel discussion titled " Geopolitical tensions and long-term macroeconomic challenges ", which was attended by the former Secretary General of NATO, Jaap de Hoop Scheffer, and the member of the Council of De Nederlandsche Bank, Feike Sijbesma. The panel discussion chaired by the Governor is one of the two panel discussions at the high level conference “Macroeconomic challenges in a world with geopolitical tensions, high inflation and rising inequalities”, organized by De Nederlandsche Bank, which was also attended by Kristalina Georgieva, the Managing Director of the IMF, governors and other high representatives of the central banks of the member countries of the Dutch-Belgian constituency within the IMF, as well as by the Vice Governor Emilija Nacevska.
In her opening speech, the Governor underlined that the latest Global Risks Report of the World Economic Forum includes the geoeconomic conflicts in the three most important global risks, together with the crisis related to consumer prices, as well as climate changes. One of the main threats coming from the geopolitical tensions is the global fragmentation which would result in losing the benefits of the long-term process of global economic integration.
"Globalization has brought many benefits. In the last four decades, the growing trade, financial i technological integration increased the global income, according to some estimates as much as by additional 10% of GDP in a period of one decade. This is especially noticed in the less developed economies, where globalization is the driving force of the income convergence and saving from poverty of more than billion people, which is evident from the data on the reduced levels of poverty from 43.6% in 1981 to less than 10% in 2019. Also, globalization is one of the most important factors for achieving a substantial fall in global inflation in the period before the pandemic”, Angelovska Bezhoska said.
The pandemic, and this year also the war in Russia, represent a significant test for globalization. Costs arising from trade fragmentation, the opposite process of globalization, are assessed at 0.2% up to 7% of the global GDP, and if the trade fragmentation is accompanied by fragmentation of technologies, even up to 12% of GDP. These effects are more pronounced in developing economies, especially in small economies, which are dependent on the larger ones in terms of trade and technology.
“These global developments are relevant to the economies of Central, Eastern and Southeast Europe where the free movement of goods, finance, technologies and knowledge are the driving force of the economic growth and the convergence”, said the Governor, stressing that trade integration of this group of countries in the last two decades has contributed to GDP growth by additional 40 percentage points, while financial integration has contributed by additional 30 percentage points in the last decade.
Taking into account the current situation with the already slowing convergence and the need to fight off the latest challenges such as the digital and energy transformation of the economies, the region needs strong interaction and integration with the developed European economies, the Governor Angelovska Bezhoska said.