Ireland's economic recovery continues to be weighed down by the aftershocks of the property collapse, with GDP growth this year reaching just 0.6%, lower than the Government's target of 0.75%, according to the European Commission.
The Commission's spring economic forecast shows that unemployment this year will reach 14.6% and fall only slightly to 14% next year.
The report says that emigration has not had as positive an impact on the unemployment levels as previously thought.
However, Ireland's exports were continuing to show strong growth.
The spring forecast also suggests, though, that higher interest rates pose what it calls 'a key risk' to the Irish economy, although this could be offset if Ireland was granted a reduction in the interest rate paid for the EU/IMF rescue package.
Meanwhile Ireland's budget deficit will narrow to 10.5% in 2011 - higher than Government forecasts due to lower tax revenue.
The deficit is expected to fall to 8.8% in 2012.
Ireland's public debt is expected to rise to 118% of GDP by 2012, although, again, that could be offset if the Government proceeds with the sale of some €5 billion worth of state assets identified for possible sale by the Review Group on state Assets and Liabilities.
The report shows that Ireland is gaining competitiveness thanks to wage moderation.
However, the report contains a reminder that Irish wages levels between 2002 and 2006 were among the highest in the euro zone.
The forecast says that 'net exports are continuing to continue making strong positive contributions to growth.'
Irish exports increased by 9.4% in 2010 while exports were expected to put in a 'solid performance' in 2011-12.
However, Irish exports remained vulnerable to US and UK currency movements, while sluggish domestic demand remained a problem.
On interest rate increases by the ECB, there was a warning that the 'large exposure of Irish households to mortgages on short term rates' meant the impact of rate increases could be 'substantial.'
The forecast says that the ongoing downsizing of the construction sector is expected to continue into 2012, though this may be 'somewhat offset by a moderate pick-up in equipment and machinery investment once confidence has been restored and prospects improve'.
Speaking to reporters at the launch of the figures, the EU Commissioner for Economic and Monetary Union Olli Rehn welcomed Tuesday's jobs initiative.
He said: 'Growth and jobs are now the real challenge for Ireland, and in terms of growth I think it's important that export growth and industrial production are showing positive signs.
'In order to support this tendency it is important that the Government is taking the initiative in terms of its recent jobs initiative,' he added.
