A Europe-wide report out today says Ireland will have the greatest recovery rate among euro zone members next year.
Ernst & Young's quarterly euro zone forecast says Ireland will jump from its current 15th to second position in terms of GDP growth in 2011 at 2.8%. It sees the economy contracting by 1% this year.
The survey says that corrective action taken by the Government has shielded Ireland from a Greek-style financial crisis. The actions equate to a cumulative fiscal tightening of almost 9% GDP between 2008 and 2011.
It also finds that Ireland's cost base has fallen further than any other country in the euro zone in both 2009 and 2010. Inflation rates fell by 1.7% in 2009 and the full year forecast for 2010 is for an additional fall of 1%.
But in terms of employment, the results are less optimistic with Ernst & Young forecasting an annual unemployment rate of 12.6% until at least 2014. It warns that any medium term economic recovery in Ireland will be largely jobless.
'Today's forecast provides further evidence that Ireland is finally turning a corner and provides reassurance that we will not experience a 'lost decade' of economic growth as many had feared,' commented Mike McKerr, senior partner of Ernst & Young's Irish firm.
'Our continued focus on falling costs remains key to Ireland's ability to compete on international markets, attract foreign investment and restore its economic footing,' he added.
Ernst & Young cautions that the imminent threat of default in the euro zone may have passed but the crisis is far from over. Ernst & Young has revised its forecast for the region's growth down to 0.8% this year and 1.3% for 2011.
It warns that unless the euro zone seriously tackles structural reforms, the risks of an economic 'lost decade' like that of Japan in the 1990s are significant. This is especially true for countries in Southern Europe.
