Employers' group IBEC is forecasting economic growth of 1.8% this year, slightly above Government forecasts.

In its latest economic forecast, the organisation says Ireland’s economy grew by 1.2% in 2012, making it the second fastest growing economy in the eurozone.

It believes a slight increase in domestic demand will help the economy to grow at a slightly stronger rate this year.

The report also says consumer confidence may be boosted by a deal on the promissory note payments, which would help the domestic economy.

Elsewhere in its outlook IBEC also notes a survey of employers, in which 39% say they expect to increase pay by an average of 2%.

However, six out of ten employers say they will freeze pay at 2012 levels in a bid to regain competitiveness.

IBEC sees employment levels stable, but with high unemployment continuing.

It also forecasts no increase in consumer spending.