Ulster Bank has forecast GDP growth of 3.1% this year in its latest Irish Economic Outlook, up on its previous prediction of 2%.

The bank said it had upgraded its forecast as the recovery becomes "more broadly based", with exports, consumer spending and investments all growing at the same time.

Ulster Bank also cited improving employment data, car sales and increased activity in the housing market as positive indicators for the country’s economy.

However it said high levels of private and public sector debt placed some downside risk on the economy, particularly in the context of a weak euro zone recovery and tensions in the likes of the Ukraine.

Despite this the bank forecast growth of 3.2% next year, with the gap between GDP and GNP growth narrowing in the same period.

Ulster Bank is the latest institution to upgrade its economic forecasts for 2014.

Earlier this month, Davy Stockbrokers said it expected the country's economy to grow by 3.5% this year, while the Central Bank last month increasing its GDP growth forecasts to 2.5% this year and 3.3% in 2015.