Skopje, 5 June 2023 

According to the latest report of the World Economic Forum, the risk of the global economy fragmentation (deglobalization) is one of the three biggest global risks, along with the consumer price crisis and climate risks. The process of deglobalization can have a particularly unfavorable effect on small economies, which by their nature are more dependent on foreign trade and access to external financing. This was one of the subjects that the Governor of the National Bank, Anita Angelovska Bezhoska tackeled at the round table discussions chaired by the IMF Managing Director Kristalina Georgieva within the conference “Policymaking in Choppy Waters: Fostering Resilience in Central Eastern and South-Eastern Europe” organized by the Croatian National Bank (HNB) and the International Monetary Fund (IMF). The conference was opened by the Managing Director Kristalina Georgieva, together with the Prime Minister of the Republic of Croatia Andrej Plenkovic and the Governor of the Croatian National Bank, Boris Vujcic.

"The pandemic and the consequences of the war in Ukraine are one of the biggest stress tests of the decades-long globalization process. According to some estimates, the globalization process in the past four decades has enabled an increase in global income by about 10% in the past decade. "Deglobalization is a particular risk for the countries of the region, where due to the eventual reduction of trade flows, as well as the  flows of capital, labor and technological innovations, the growth potential and real convergence can be significantly reduced," the Governor said out in her presentation. In these economies, in the past two decades, trade integration has increased significantly, reaching 113% of GDP, and financial flows have also increased, especially as a result of the foreign direct investment. All this enabled transfer of finance, knowledge and technologies from more developed economies, and thus accelerated real convergence, which on average increased by about 30 pp. However, in the countries of the Western Balkans, this process is slower, which is why the deglobalization risk is a particularly big challenge for this group of countries. The countries of the Western Balkans, which are also not part of the European Union, have a lower level of income, which is only about 40% of the income of the EU, and greater needs for investments in infrastructure. Such situations, as well as the new challenges brought about by the energy crisis and the need for greater digitization, highlight even more the role of globalization in the development of these economies. Hence, it is necessary to pay more attention to structural reforms that will reduce the vulnerability of these economies and increase their resilience to shocks, while also raising their growth potential. International institutions can support this process through additional funding, especially for countries that are not members of the EU and do not have access to European structural funds.

This conference that the Governor attended is a high-profile event and traditionally brings together central bank governors, as well as finance ministers from the CEE region and senior representatives of international financial organizations.