The employers' group, IBEC, has said that Ireland is beginning to emerge from its deep recession.
In its latest quarterly economic trends report, IBEC says it is more confident about recovery because of a rise in consumer and business confidence. The group now forecasts that the economy will shrink by 0.7% in 2010 in contrast to its earlier prediction for a fall of 1.6%.
For next year, it has also revised its forecast growth rate from 1.7% to 2.1%.
IBEC said that tough action to stabilise the public finances has resulted in some restoration of confidence in Ireland on international financial markets.
However, it warned that confidence is a fragile commodity and 'any undermining of the national effort will increase the cost of servicing the national debt'. It added that threats of industrial action could be damaging to the economy.
'Financial markets are ruthless in their pursuit of any perceived weakness and the Irish economy remains in the spotlight,' commented IBEC director Danny McCoy.
'Any deviation from current economic targets will be punished by higher interest rates and credit restrictions,' he added.
