CBC analysis calls for deeper European integration amid geopolitical fragmentation
A Central Bank of Cyprus analysis says geopolitical tensions are reshaping global economic relations and increasing the need for European scale and resilience.
Nicosia, Cyprus. The Central Bank of Cyprus on Thursday published an analysis arguing that deeper European integration is becoming increasingly important as geopolitical tensions reshape global trade, investment and economic policy.
The article examined the implications of the changing global economic landscape for Europe’s competitiveness and resilience.
Changing global economy
Titled “More Europe in a Fragmented World: Geoeconomic Fragmentation, China’s Rise and Europe’s Strategic Response”, the article was written by economist Marios Louca.
“The global economy is entering a new phase in which geopolitical considerations increasingly shape economic relationships,” the article said.
It said the shift presents challenges for Europe’s openness-based growth model, while increasing the importance of scale, resilience and collective action.
From globalisation to strategic considerations
The analysis said the world is not necessarily entering an era of deglobalisation, but a period in which international economic integration is being reshaped by strategic and geopolitical considerations.
Following the end of the Cold War, globalisation appeared irreversible, marked by falling trade barriers, expanding capital flows and increasingly international production networks.
According to the article, this openness brought productivity gains, lower production costs, greater consumer choice and higher living standards, with Europe among the major beneficiaries.
European vulnerabilities
The European Union built much of its prosperity on international trade, cross-border investment and global value chains, leaving its economy particularly exposed to changes in the international trading environment.
The article said a succession of shocks, including the global financial crisis, the Covid-19 pandemic, Russia’s invasion of Ukraine and growing strategic rivalry between the United States and China, had highlighted vulnerabilities arising from deep economic interdependence.
“Resilience and security are increasingly being considered alongside efficiency in economic decision-making,” the article said.
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