Vasileios Madouros: Navigating economic cross currents

Remarks by Mr Vasileios Madouros, Deputy Governor of the Central Bank of Ireland, at the University College Cork, as part of an outreach visit to Cork, Cork, 23 May 2025.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Just miles from here, off the southwest coast of Cork, the Atlantic does not flow uniformly. Tides push in one direction and swells in another. Cross currents are a fact of life at sea, and even experienced sailors need to stay alert. The aim is not to avoid cross currents, but to recognise them, be ready to respond, and keep steering with purpose.

Cross currents are also a fact of economic life. And we are navigating one at the moment. In one direction, global shocks are weighing on the domestic economic outlook. In the other, the domestic economy is entering this period from a position of strength, and – if anything – has been bumping up against domestic capacity constraints.

Today, I would like to expand on how these different forces are shaping the economic outlook and discuss the implications of these developments for domestic economic policy. 

The outlook for global growth has shifted downwards

Let me start with the global context. Since the beginning of the year, we have seen three interrelated shocks affecting the international economy. A material shift in trade policy; a sharp increase in policy uncertainty; and an increase in market volatility. Without a change in direction, these will continue to weigh on the global growth outlook. Let me briefly cover each in turn.