The latest EY Economic Eye has predicted strong growth this year and next, though it warns the recovery is uneven across the island of Ireland.

The report expects GDP growth of 5.8% in the Republic for 2015, and 4.3% in 2016 on the back of strong consumer spending and investment levels.

However, it states some areas of the country are lagging behind, with urban areas drawing the majority of the activity, while leaving more rural locations with considerably higher unemployment levels.

Urban centres have experienced significantly faster growth than in rural areas, enjoying the highest levels of high value-added employment and resulting economic benefits.

In addition, the increasing pull of city living, particularly amongst young graduates, is further diverging growth from more rural areas.

The report finds that employment continues to grow in the Republic, with 56,000 new jobs created in total in 2015.

Unemployment in Dublin and its commuter-belt in the Mid-East has decreased significantly, falling to 8% and 8.1% as at Q3 2015.

However, other regions lag behind substantially, as they struggle to compete for inward investment and labour, particularly in the South East and Midlands where unemployment is still over 12%.

Growth rates enjoyed this year are projected to moderate in 2016, moving to a healthier, more sustainable range.

EY also forecasts a much slower pace of growth in Northern Ireland, which it says is set to expand by 1.7% this year - down 0.3% from its last forecast during the summer.

Ireland is still on track to outpace all other EU member states in 2015 with regard to economic growth.

Commenting on the forecast Economic Advisor to the EY Economic Eye s Neil Gibson said: “The bounce-back of the domestic economy in 2015 has helped lift Ireland to the top of the growth charts.

“Although these exceptional growth rates are unlikely to be maintained into 2016, domestic growth in the Irish economy is now matching the dynamic export sector. Threats from slowing global growth and risks from economic overheating are the potential challenges that lie ahead,” he added.

EY states that a key challenge for policy makers will be to bridge the gap between urban and rural, to avoid economic overheating in specific areas of the economy.