Escrivá: Global order shifts, institutions under pressure
Banco de España Governor José Luis Escrivá argues that the global economy has entered an era of structural uncertainty, challenging previous assumptions of predictable growth. This shift impacts economic openness, institutional quality, and social cohesion, demanding new approaches from institutions.
From predictability to structural uncertainty
For decades, the global economy operated under the premise of predictable growth and stability, driven by economic integration and technological progress.
This assumption is now difficult to sustain, as a succession of complex and unprecedented shocks – from the Great Recession and the pandemic to inflationary episodes and aggressive trade policies – has ushered in an era of structural uncertainty.
This new environment impacts three key vectors of globalization: economic openness, institutional quality, and social cohesion.
Economically, globalization is transforming rather than disappearing.
Geopolitical fragmentation, strategic supply chain use, and competition for critical technologies are redefining global trade, reconfiguring around geopolitical affinities and resilience.
The European Union must balance its openness with enhanced capacity to identify vulnerabilities and diversify dependencies.
Institutions, technology, and social tensions
A complex institutional and political layer is emerging, marked by democratic setbacks, polarization, and institutional contestation.
This influences institutional effectiveness and their ability to respond to shocks.
Social tensions are also rising in advanced economies, driven by inequality, housing access, demographic aging, and climate shocks, impacting growth and macroeconomic stability.
The deteriorating quality of institutions is crucial for effective economic responses.
Technology plays a central role, amplifying transformations and conditioning productivity, with geopolitical implications.
Its concentration creates dependencies and vulnerabilities.
Its aggregate economic impact and social implications remain uncertain, depending on regulatory frameworks and institutional strength.
Navigating the new fog
This new global landscape presents significant challenges for central banks, demanding a fundamental shift in analytical frameworks to model complex, interdependent realities.
Central banks must enhance transparency and accountability, providing clear diagnoses to maintain public trust amidst heightened uncertainty.
Adapting tools and communication will be crucial for navigating this demanding era and supporting sound public policy.