Skopje, 2 September 2022 (MIA) – Serious, structural changes are necessary – in the quantity and quality of human potential, in good governance and in the rule of law. Let’s prevent the demographic decline, to find a way to grow efficiently and innovatively, because that is the "entrance" to a faster and better development of society. But it takes a lot of effort, commitment and generational responsibility for this kind of reform. Before us is the historical responsibility - what values will we affirm and create with the current decisions, how much will we incorporate in them the experience gained and the lessons learned from the past, but also how much we will demonstrate a clear vision for the future, the Governor of the National Bank, Anita Angelovska-Bezhoska said. As Angelovska-Bezhoska pointed out at today's panel "The measurability of values: economic visions", the strong shocks that the world, including our economy, has faced in the past few years have brought to the surface the structural weaknesses, but also the critical need for reform and increasing the potential of the economy. It is clear, the governor said, that in times of crisis macroeconomic policies are the first "line of defense", but their room for maneuver is not unlimited. Hence, even in periods of dealing with crises, usually by taking quick and short-term macroeconomic measures, the focus must not be lost on structural measures that reduce the vulnerability of economies and increase the potential for growth. Referring to the pandemic and the Russia-Ukraine conflict, the Governor pointed out that the economic implications of such situations are great. Inflation in the world and at home is growing under the pressure of the sharp and unprecedented growth in the prices of basic resources, and fragile economies like ours are at risk, and therefore, underlining, the challenge for policy makers is enormous. - As a central bank, despite numerous crisis episodes, for more than two decades we have successfully provided one of the key prerequisites for economic growth – macroeconomic stability. But in order to raise the quality of life and increase well-being, it is not enough. In the long run, the drivers of growth cannot be monetary factors, but rather structural factors such as human potential, physical capital and productivity. Our income level of only about 38 percent compared to the European one, as well as the slow progress in closing this large gap (only three percentage points in the past decade) alerts that serious changes are necessary in structural segments such as good governance, the rule of law, in the quantity and quality of human potential, emphasized the governor. Unfortunately, Angelovska-Bezhoska added, there are still numerous challenges in these structural segments. - In the decade before the pandemic, our economy grew at an average rate of about 2.5 percent, which is somewhat higher compared to the average for CEE countries, but this growth was not driven by productivity, as an indicator of innovation and efficiency. Our productivity has been stagnant for a long time at a low level of only 40 percent of German productivity. It is good that the investments had a solid contribution to the growth, considering the fact that the amount of capital in our country is only 43 percent of the European capital, but the share of investment in innovative capital, i.e. innovative technologies, is still small. Human capital also had a positive contribution to growth in the past decade, but mainly as a result of the quantity and not the quality of labor, emphasizes Angelovska-Bezhoska. The pandemic, and now the war in Ukraine, the governor added, are creating a different world. The geopolitical order is changing. We are witnessing rapid polarization, rapid changes in the behavior of economic entities, economic disintegration and deglobalization. - We are facing an unprecedented combination of rising prices, on the one hand, and downward prospects for the economy on the other hand, that is, the risk of stagflation. This is especially a challenge for economies, such as the Macedonian one, which have not yet fully recovered and returned to the pre-pandemic level, and at the same time have high trade openness, which means greater vulnerability to external shocks. In this context, the challenge of the policy makers is huge – how to stabilize the inflation which is primarily driven by factors on the supply side, without significantly disrupting the trajectory of economic recovery?, emphasizes Angelovska-Bezhoska. She is insistent that the National Bank remains consistent with its primary mandate, which is to maintain medium-term price stability with all available instruments. - However, good interaction between monetary and fiscal policy is of great importance, which, by its nature, can act more directly to mitigate price pressures, but also provide support for the most affected citizens and sectors in the economy. Considering the limited fiscal space, as well as the need to keep the fiscal position prudent without creating additional pressures on demand, a good setting of priorities and targeting of fiscal measures is needed, the Governor concluded. According to her, even after three decades, the findings about the disparities, that is, about the structural weaknesses of our economy, remain similar. - The strength of this current economic shock is also the result of insufficient focus on these segments in the past period. Considering the complexity of dealing with disparities, it once again reminds us of the historical responsibility we have today – what values we will affirm and create with our current decisions, how much we will incorporate the experience gained and the lessons learned from the past, but also how much we will demonstrate a clear vision for the future, the governor said and ordered us to strive to be a value, not a success. The panel "The Measurability of Values: Economic Visions" is the first of the debate "Worths and Values". It is dedicated to the economic transformation so far and the values created through that process, to the role of international financial institutions, as well as to future perspectives and challenges in the context of accelerated inflation and the slowdown in world growth. The panel includes academics Abdulmenaf Bejeti and Taki Fiti, former finance ministers Cevdet Hayredini and Nikola Popovski, who is also a member of the NB Council and a university professor, as well as Silvana Mojsovska from the Economic Institute. After this panel, two more follow - "Measurability of values: interactions" and "Measurability of values: complementarities and opposites 2022". The "Worths and Values" debate, which can be followed directly on the Facebook page of the National Bank, will continue on September 5, with an additional three panels. dk/ba/