Bloxham economist Alan McQuaid now expects the Irish economy to grow by just 0.9% this year, though he adds that there is a risk this could be even lower.
In his quarterly outlook, the economist says growth should pick up to 2% in 2009, but only if the surge in oil prices comes to an end and the ECB cuts interest rates at some stage next year.
The economist says Finance Minister Brian Lenihan faces the most difficult Budget in more than a decade in December. Mr McQuaid is forecasting an Exchequer deficit of €6.5 billion this year, compared with a Government target of €4.9 billion.
Mr McQuaid believes the annual rate of inflation will average 4.5% this year, while the unemployment rate will climb to 6% over the next 12 to 18 months.
