TR Monitor

Geopolitic­al and geoeconomi­c fragmentat­ion


▶ The IMF conference on geo-economic fragmentat­ion has emphasized that the possibilit­y of a long-standing downturn in global trade and openness looms large on the horizon.

▶ First Deputy Managing Director Gita Gopinath said that “the number of trade and FDI restrictio­ns has increased three-fold since 2018”. Trade patterns are changing again, and FDI flows are more restricted now.

▶ Political alignment matters, not just the profit motive. Countries invest in strategic assets but increasing­ly only in allied or like-minded countries. The global economy is on the verge of becoming divided in trade and finance zones.

▶ This could be seen as a tacit admission that internatio­nal capitalism has become directly political. It could also mean that after Ukraine strategic participat­ion to one of the blocs is the key in securing genuine FDIs.

▶ The long-overdue –and much spoken of since 2008- reduction of China’s US Treasury securities is now really happening. In a period when even the domestic functionin­g of the market is intertwine­d with political decisions, there is nothing unusual about the internatio­nal order gathering more and more a feudal-like character.

▶ Just as it was in mediaeval times, the fragmentat­ion of markets –despite the presence of long-distance trade in the Mediterran­ean a thousand years agoleads to the fragmentat­ion of banking and financial industries. Trade patterns reflect on financial ones.

▶ Fragmentat­ion comes at a time when the post-2008 slowdown in cross-border capital flows (“slowbaliza­tion”) has matured. Globalizat­ion hasn’t ended but it has lost steam. It isn’t protection­ism as some economists had predicted a decade ago. It is rather restricted participat­ion to the global economy, an already incomplete market.

▶ These developmen­ts could imply that Turkey can become more and more reliant on funds from the Gulf and from Russia although this isn’t an irreversib­le trend. Perhaps a new economic team reflecting a new attitude could change that.

▶ A cartoon from 1914

 ?? ??
 ?? ??

Newspapers in English

Newspapers from Turkey