The economic think tank, the ESRI, has predicted that the economy will grow by 5% next year. Its latest report paints a very positive picture of the Irish economy in 2004.
It says economic conditions have remained strong with GDP, the amount of goods and services produced in the economy, expected to have increased by 5.5% by the end of the year.
Looking to 2005, the ESRI predicts that a stronger euro, the lack of increases in indirect taxes in the budget and the fact that interest rates are unlikely to rise before the end of the year, will keep inflation at an average of 2.1%.
However the ESRI warns that growth in the economy could be hit in 2005 by a further weakening of the US dollar.
A slowdown in the rate of house completions could also have an impact. Construction is responsible for around 20% of the growth in the economy this year.
The ESRI says the current rate of completions is substantially above what the economy needs. As a result, the number of homes finished is likely to drop, and this will hit overall growth in the economy.
