13-05-2025
Central Bank chief Makhlouf warns uncertainty will persist even if trade war passes
Uncertainty in the global economy is likely to persist even if a global trade war proves short-lived, European Central Bank governing council member Gabriel Makhlouf said in a speech today in Dublin.
"Even if a full-blown trade war turns out to be short-lived, the uncertainty effects will persist for some time," Mr Makhlouf, the Governor of the Central Bank here, said.
"Amplification risks from elevated public and private debt levels, and how these might ripple through the financial system, are a further downside risk," he added.
He made his comments in a speech at the International Economic Symposium in Dublin, an event co-hosted by the Central Bank and the National Association for Business Economics.
"The global economic integration that has characterised most of the last half-century is now stalled, if not reversing," the Governor also noted.
He said the last few weeks have seen an acceleration in the pace and scale of change.
"The sudden shift led to increased financial market volatility across the world, reminding us all of the fact that that global trading systems and global capital flows are two sides of the same coin," he stated.
"As a country at Europe's western edge, but at the heart of the European Union, and indeed the euro area, Ireland plays an important role in the global financial ecosystem," he said.
"We are a highly globalised economy, with a large outward-focused financial sector. We see significant capital flows through our financial system and we have been closely and carefully analysing daily trade flow data during this period of volatility," he added.
Governor Makhlouf said we are facing a new global economic order characterised by trade fragmentation, structural economic shifts, more frequent supply disruptions and policy unpredictability.
"Nobody welcomes the geoeconomic fragmentation we are currently experiencing, but I believe it merely serves to accelerate changes that up to recently were more gradual. To a large extent, it brings to a head decisions that, for Europe, had been put off for far too long," he concluded.
