The Organisation for Economic Co-operation and Development has forecast that the Irish economy will grow by just over 5% this year and in 2007, before slowing to 4.5% in 2008.
However, the OCED warns that boosting competition in the electricity and gas sectors was becoming 'a matter of urgency', as these areas were contributing more to inflation.
The Paris think-tank said growth was being fuelled by strong household spending, but inflation was likely to remain above the Eurozone average.
It urged the Government to focus on keeping inflation in check, saying the Budget should 'refrain from fuelling consumption'.
It said the Budget should prioritise spending on areas such as infrastructure and training.
