A report by the Economic and Social Research Institute has said the outlook for the Irish economy is improving following a steady recovery in the international economy.
In its winter economic commentary, the ESRI predicts that growth will accelerate to 3.5% during the next 12 months, and that inflation will fall to below 2% over the next two months.
This, it says, will provide a good backdrop for new social partnership wage negotiations due to start in the spring.
The commentary warns that further strengthening of the euro and higher inflation here means competitiveness pressures will remain.
According to the report, Ireland's public finances are healthy and are unlikely to prevent the economy reaching its full potential over the coming decade.
In contrast to other EU states, the report says Ireland should have no problem adhering to the discipline of Europe's stability and growth pact.
