Finance Minister Michael Noonan has said the economy may grow by as much as 4.5% this year.

The minister made his comments after the CSO estimated that the economy grew by 1.5% in the second quarter of this year - the second successive quarter of strong growth.

Ireland is now recording the strongest economic growth in the European Union.

Mr Noonan said instant estimates by his officials suggested a much stronger growth level than previously estimated by the department.

He said the key budget target of getting the deficit below 3% of GDP next year could now be hit without further spending cuts or tax rises.

Mr Noonan said he was now looking at a fiscally neutral Budget next month, with changes intended to boost employment levels and support continued further growth in the economy.

But he said it would not be a giveaway Budget, as the country still faced an enormous debt burden.

Last week, the minister revised the growth estimate up to 3%. The last official estimate was published in April and was for growth of 2.4%.

Mr Noonan also said the very strong growth meant that the budget deficit would come in well below 4% of GDP, and he thought it could be as low as 3.5%.

Given the outlook for economic growth averaging 3% a year for the next five years, all budget targets can be met, he added.

Speaking on RTÉ's Six One, Mr Noonan said he had scope to re-organise the personal taxation system so that it was jobs-friendly.

He said tax rates were more favourable in places such as Britain, where there has been an influx of Irish workers over the last number of years, and that he wanted to attract these people back to Ireland.

"I'm concentrating on securing the recovery, creating more jobs and getting the emigrants back,” he said.

“If you take the tax rate that a young Irish professional, or a young Irish building worker pays in London, they won't go into the higher rate until they are in excess of £150,000.

"They'll go into the higher rate in Ireland at €32,800. If we want to get those people back, we'll have to make the personal taxation system in Ireland friendly."

Commenting on the CSO figures, Tánaiste Joan Burton described them as "quite striking".

Speaking in the Dáil today, the Tánaiste said the great thing about the figures is that they show the economy is "seriously in recovery".

She said with GDP growth of 5.8% in the first half of the year and GNP at 9% annually "it really means we have left the worst difficulties of the collapse behind and it is not a credit-fuelled bubble."

Ms Burton also responded to calls for the Christmas Bonus for those on social welfare to be restored.

She said as conditions improve it would be nice to see certain areas addressed but that she could make any commitments.

There was a little bit of extra leeway, Ms Burton said, but “we can't lose the run of our ourselves”.

She said no decisions had been made, and that all of the areas of expenditure would be looked at.

Today's preliminary Quarterly National Accounts data from the Central Statistics shows GDP growth of 1.5% and GNP growth of 0.6%.

Industrial output, including construction, increased in volume terms by 4.7% between the first and second quarters. Distribution, transport software and communication output increased by 2.9%.

Construction GDP increased by 6.2%, while industry grew by 5.3% and agriculture grew by 3.9%.

Industrial growth was broad based, with both the multinational sector and the so-called "traditional" sector recording growth.

In the last two quarters, both domestic demand and net exports contributed to GDP growth, and according to the CSO, this is something that has not been seen for quite some time.

Capital formation (or investment) is up 9.1% in the second quarter.

Of this, construction recorded growth of 7% while other capital investment grew by 8.5%.

Domestic demand grew by 1.1% and net exports grew by 7.2%.

Year-on-year, the GDP growth rate is 7.7%, while GNP recorded growth of 9% compared to the same quarter in 2013.

Today's CSO figures show that year-on-year growth rates for other sectors include Industry, up 6.3%; distribution transport, software and communications up by 11.3%; other services grew by 2.7% and building and construction rose by 9.1%.

Personal consumption grew by 1.8% compared with a year ago, while investment was up 18.5% and net exports were 17.4% ahead compared with the second quarter of last year.  

Net factor outflows - profits flowing to foreign multinationals - increased by €152m or 9% year-on-year.

Output from other services fell by 0.8%, while public administration fell 0.5%.

GDP figures are 'gangbusters' - economist

Alan McQuaid of Merrion Stockbrokers said the figures showed the economy was "booming again". 

He said the figures were "gangbusters" and suggested that GDP could go above 5% in real terms this year.

"Although the euro zone as a whole is struggling, Ireland has benefited from its close trading ties with the US and UK, two of the strongest performers on the world stage this year," he said.

"Competitiveness gains made against the rest of Euroland in recent years have also helped."

Davy economist Conall Mac Coille said they would have to revise their forecasts upwards on the back of the new data, which illustrated a "broad-based" recovery in the economy.

He said Irish GDP figures could often be volatile and prone to review, however he was confident the fresh data was "not a statistical mirage".