The Irish economy is performing well but external factors are a growing threat to continued growth, according to the business and employers' group Ibec.

Ibec's quarterly economic outlook is forecasting growth of 4.8% this year and 3.9% next year.

It says that growth is being driven by a buoyant labour market, with figures showing total household disposable income increasing sharply.

But Ibec says the lack of progress in Brexit negotiations has increased the risk of a no-deal scenario and all forecasts must be seen in that context; the downside risks are increasing.

Ibec's Head of Tax and Fiscal Policy Gerard Brady said: "The Irish economy continues to perform exceptionally well, despite great uncertainty.

"We expect GDP growth of 4.8% this year and 3.9% for 2018 on the back of a recovering consumer economy and continued strong export growth to the US, EU and developing markets.

Mr Brady noted that the consumer economy, in particular, is expected to improve, with household disposable income growing by 5%.

"With low inflation and 80% of net new jobs being created outside Dublin, households are clearly seeing the benefits of the recovery," he said.

"The Brexit debate in the UK is now mired in divisive domestic politics and the final destination for all involved is an unknown.

"Whilst our best hope is that economic interests win out in the end, it is far from clear that they will. Diversification by our exporters will be important, but our analysis shows how difficult it may be for sectors most exposed to the UK. 

"At recent rates of new market development it would take five years for the dairy sector and nine years for the meat sector to make up for lost trade with the UK in a hard Brexit scenario," Mr Brady said.