Friends First economist Jim Power has predicted that the Irish economy will grow by more than 5% this year.
In his latest quarterly outlook, the economist forecasts that gross domestic product will expand by 5.5%, while gross national product will grow by 5.2%. These figures are both slightly higher than his previous predictions.
Power says inflation is stable, with intense competition keeping a lid on goods prices, but services inflation is still relatively high.
He says the rate of price increases is much higher in areas controlled by the State, adding that higher inflation in utilities is putting pressure on small and medium-sized businesses, particularly in manufacturing.
Power says cost increases, added to loss of competitiveness and competition from Eastern Europe, China and India, is threatening the future of the manufacturing sector.
He says the euro's weakness will provide some solace, but manufacturing jobs will continue to be shed. The economist argues that further dollar strength seems likely as investors worry about political uncertainty in the EU in the wake of the French and Dutch referendums.
Power says consumer spending has picked up strongly this year after a sluggish period, but believes that some people are already spending on the strength of their maturing special savings accounts.
