The economy grew by 1.5% in the three months to the end of September, driven mainly by an increase in domestic demand.

The latest Quarterly National Accounts figures from the Central Statistics Office are consistent with a return to stronger growth in the second half of the year, as predicted by earlier indicators.

The figures show that GNP, which strips out the effect of foreign owned multinationals, grew by 1.6% in the third quarter compared to the second.

The growth rate for the three-month period was the fastest since 2011 and was better than expected.

The CSO said that in the 12 months to the end of September, the economy grew by 1.7% in GDP terms. GNP grew by 3.9% over the same period.

Growth came from construction, exports, services and industry. The GNP figure is in line with earlier data which indicated a large increase in employment over the past year.

The economy continued to feel the effects of the downturn in Europe, with exports down by 0.8% on a quarterly basis.

But the domestic economy showed signs of revival with consumer spending bouncing back from a sharp contraction earlier in the year to grow 0.9% in the three months from July to September.

Commenting on today's figures, Merrion economist Alan McQuaid said that the economy is set to show a stronger performance in the second half of 2013 than in the first half, and that upward momentum should lead to a positive carryover into 2014.

The economist said that he believes Ireland is better placed than most to benefit from the upturn in the world economy.

"Assuming no major external shocks next year, there is every chance that the Government’s official 2% GDP growth target will be met.

"This in turn will boost the country’s chances of meeting its official budget deficit target of 4.8% of GDP in 2014, and enable it to raise money on the financial markets at relatively low and affordable interest rates post its EU/IMF bailout exit," he added.

Employers' group IBEC said the figures show a "solid" recovery is under way, that growth is becoming more balanced and the domestic economy is performing "particularly well".

SIPTU said the figures show a welcome pick-up in domestic demand, but added that a real GDP increase of 1% in the final quarter will be needed in order to realise the Government's target of 0.2% growth for the year.