A report from consulting group PricewaterhouseCoopers says the Irish economy is set to outperform all other euro zone countries this year.
It estimates that gross domestic product (GDP) expanded by 5.9% last year and will rise by 5.1% this year. PwC believes euro zone growth will slow from 2.7% last year to 2.1% this year.
The report argues that domestic demand is likely to continue to be the main driver of overall growth despite slowing consumer spending in 2007.
'Consumer spending growth is expected to slow as interest rates rise further and employment growth weakens,' PwC says. But it believes the release of SSIA funds is likely to provide a boost to disposable incomes.
But the report says expectations of high inflation and rising labour costs could lead to a continued erosion of Irish export competitiveness in 2007, while the sector is also likely to suffer from slower growth in its main markets in 2007.
