The Irish economy has moved past its recovery phase and has enough strength and momentum to shrug off the impact of Brexit in 2018, according to an upbeat forecast from employers representative group Ibec. 

In its latest economic outlook, Ibec said the current phase of growth is more sustainable than the Celtic Tiger era as it is based on business investment rather than being fuelled by excessive borrowing.

Ibec's latest outlook forecasts growth of 4.2% for this year following expected growth of almost 6% in 2017.

"All indicators are now pointing to strong and sustainable growth in Ireland’s economy in 2017 and 2018 underpinned by business investment and strong consumer spending," the employers body stated.

It said that Irish households are clearly benefiting with real disposable incomes growing at over four times the euro zone average and per-capita income in working households now likely to have passed out its pre-crisis peak.

Ibec's Head of Tax and Fiscal Policy Gerard Brady said this current phase of the Irish economy is more sustainable than the "boom" period as it is underpinned by business investment in plant, machinery and equipment (excluding IP and aircraft leasing activities) of almost €1 billion per month. 

"In addition, figures show that Irish households are now in a positive net financial position (deposits outweigh loans outstanding) for the first time since the late 1990s. As a result, the net wealth position of Irish households in nominal terms has never been better whilst high Government debt is falling rapidly toward European norms," Mr Brady said.

But he said the major question facing the economy over the coming years will continue to be the ability of the economy to meet the needs of a growing population in a sustainable manner. 

He said that major challenges are already clear in the housing sector. 

"Our estimates today show that to meet Rebuilding Ireland's target of 26,000 house completions along with other construction needs by 2020 there will need to be in the region of 50,000 additional construction workers," he stated. 

Meeting 40,000 housing units a year would increase this to almost 80,000 workers, he added. 

"Delivering on the promise of growth with stretched capacity and a tight labour market, whilst also maintaining competitiveness, will be a key challenge ahead for both business and the Government," Mr Brady stated.