The International Monetary Fund has warned that higher interest rates could increase the risk of a housing bust in some countries, including Ireland.
The IMF chief economist, Kenneth Rogoff, said a global recovery could lead to higher interest rates, driving up borrowing costs.
The IMF's World Economic Outlook, published today, says this would 'reduce the support to demand that is being provided in many of these countries'.
The report mentions Ireland, the UK, Australia and the Netherlands as countries which are more at risk because of sharp rises in house prices in recent years.
The IMF predicts that the Irish economy, measured by gross domestic product, will grow by just 1% this year. Last month, the Department of Finance lowered its growth forecast to 1.5%
The IMF sees growth quickening to 3.8% next year. The fund expects an average unemployment rate of 5.1% this year, rising to 5.6% next year, but sees inflation falling to an average of 2.6% next year from 4% this year.
