Irish Economy Faces Global Uncertainty with Resilience and Research-Driven Policy

The Central Bank of Ireland’s latest reflections highlight the resilience of the Irish and euro area economies in the face of significant geopolitical upheaval and shifting global paradigms in 2025.

While the Irish economy is currently performing near its potential, Governor Gabriel Makhlouf cautions that this stable performance unfolds against a backdrop of rapid and sometimes unsettling global changes. Geoeconomic fragmentation, marked by rising nationalism and diminishing reliance on international cooperation, poses profound challenges for small, open economies like Ireland. In this environment, the erosion of trust in economic expertise and evidence-based policy further complicates the role of institutions and policymakers.

The Central Bank underscores the crucial role of independent, analytical research in maintaining stability and sound judgment. Detailed analysis has informed recent policy decisions such as the recalibration of mortgage measures, with a strong emphasis on evaluating both intended and unintended consequences. Ongoing research projects have been instrumental in shaping the Bank’s economic advice, including fiscal policy recommendations, studies on demographic trends, and assessments of the Irish economy’s exposure to global trade tensions. Recent findings suggest that, while certain sectors face challenges due to US tariffs, the overall economy remains well-positioned to adapt.

Looking ahead, the Central Bank plans to expand its research scope into digital currencies, defense spending, and financial intermediation, all while closely monitoring the risks of further global fragmentation. By promoting robust, cross-disciplinary research and maintaining an evidence-driven approach, the Bank aims to navigate uncertainty and support effective policy development.

This commitment to fact-based analysis and open dialogue is presented as critical for guiding Ireland through a complex global landscape, safeguarding economic stability, and reinforcing the value of informed policymaking.