The ESRI's latest Economic Outlook for Ireland has forecast that the economy should grow by 3% every year until 2025.

The think-tank said a crucial factor underpinning this growth is the continued expansion of the labour force, which is expected to increase by almost 2% a year.

This growth is supported by more female workers in the labour force, as well as a return to net immigration.

The ESRI's latest outlook also predicts that strong labour demand is expected to reduce the unemployment rate to just over 6% over the medium term.

On housing, the ESRI has predicted a long running demand for housing and said it now believes that 30,000 houses need to be built over the medium term.

It said that the increased credit levels associated with providing 30,000 homes is likely to pose challenges for the domestic banking sector.

This is likely to result in a significant increase in the difference between credit levels and domestic deposits, which is commonly referred to as the "funding gap".

The institute had used a new macroeconomic model to determine the Irish economy over the next ten years, which was developed by the ESRI to determine the potential path of the Irish economy in the medium to long term future. 

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