National Irish Bank has predicted that the economy will grow by 6% this year and 4.7% in 2008.
A report by its chief economist Dr Ronnie O'Toole said strong exports and consumer spending would offset 'significant weakness' in the construction sector.
Economic growth will remain strong this year and next, as foreign firms continue to invest in Ireland and consumers keep spending money.
The only threats, according to Dr O'Toole, is weakness introduced by the construction sector. This will have a significant effect in the regions where construction has absorbed the fall off from employment on farms.
Dr O'Toole said the fall in new house building would not hit employment in the sector in a big way until next year.
NIB expect house prices to remain static, as fewer houses are built, and that interest rates will continue to rise, but most likely not his week when the ECB meets on Thursday.
NIB is also confident that Ireland's competitiveness is not under threat.
The bank says Ireland remains attractive to foreign investors, and while a weak dollar does not help the multinational sector, tax incentives, productivity, and our skill set will ensure that they remain.
Dr O'Toole said the biggest risk to Ireland from the recent turmoil on financial markets was a significant downturn in the US economy, which would hit exports and inward investment by multi-nationals.
The economist also said there was a need to look again at policies to promote regional development, as the cities were now taking a bigger share of foreign direct investment, while other areas were more dependent on construction and agriculture.
