The growth outlook for the Irish economy remains optimistic for 2016 and 2017 with growth forecasts of 3.8 and 3.6 percent respectively, according to a notable think tank in the country on Thursday.
In its quarterly economic commentary, the Economic and Social Research Institute (ESRI) said the growth would be driven by consumption and investment.
"Domestic sources continue to be the driving force of growth with investment and consumption set to make strong positive contributions to GDP over the forecast period," the ESRI said.
The think tank said the country's unemployment was continuing to fall and could reach 5.6 percent by the end of 2018. Ireland's unemployment rate now stands at 6.6 percent, the lowest rate since July 2008.
The ESRI warned that construction growth could lead to the economy overheating. "The construction sector is set to assume a growing importance in the domestic economy over the medium term," said Kieran McQuinn, the ESRI's research professor.
However, he cautioned that "it is important to continuously compare the actual level of construction in the Irish economy with the underlying, long-run demand for such activity," he said.
McQuinn said the high level of uncertainty surrounding Brexit and U.S. protectionist policies was a source of downside risk. "The external environment remains highly uncertain in 2017 and 2018 as a hard Brexit becomes increasingly likely and as the U.S. administration assumes more protectionist trade policies," he said.
But the Irish economist said the outlook for Ireland's exports was expected to remain positive overall as the U.S. and European economies are expected to grow at a reasonable pace over the next two years.
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