Ulster Bank expects Ireland’s gross domestic product to grow by 5.2% this year – up from its previous forecast of 3.9%.
The bank has also increased its growth forecast for 2016, anticipating a 4.5% expansion instead of a previously predicted 3.6%.
Ulster Bank said stronger-than-expected growth in 2014 as well as solid Exchequer figures for the first half of 2015 has prompted it to raise its forecasts.
Its chief economist Simon Barry also said the economy would be boosted by a weaker euro, which will help maintain booming export figures.
However he also warns of global risks which could impact on the economy, particularly those posed by the potential exit of Britain from the European Union and ongoing uncertainty in China.
Just 2% of Irish exports go to China at present meaning minimal direct exposure, Mr Barry said, however the country would suffer from any “severe sustained deterioration” in global finances that might jeopardise its key trading partners in Europe and the US.