The European Commission has revised upwards its growth predictions for Ireland for this year and next year as it cut the overall growth forecasts for the euro zone.
GDP growth for Ireland is now forecast to reach 7.8% in 2018 and 4.5% in 2019, the Commission said in its latest quarterly economic forecast.
The Commission had predicted growth of 5.6% for this year and 4% for 2019 in its summer economic forecast.
The Commission said today that GDP growth in Ireland is expected to be strong this year, driven largely by the activities of multinational companies, but the pace is projected to moderate.
"The positive performance of the labour market and construction investment are expected to support the domestic economy in the near term," the Commission stated.
"The government deficit is projected to turn slowly into a surplus, but risks to the fiscal outlook remain," it added.
Meanwhile, the European Commission said that euro zone growth is expected to slow in the coming years as the bloc faces risks from US economic policies, Britain's unclear divorce terms from the EU and free-spending plans in high-debt members.
In its quarterly economic forecasts, the European Commission revised down its growth estimates for the euro zone next year.
It also predicted a protracted slowdown until 2020, the last year for which forecasts are available.
The revision, although expected, might complicate the European Central Bank's plans to wind down its stimulus programme this year.
But in more positive news for the ECB the Commission forecast higher inflation of 1.8% this year and next in the bloc. The ECB targets a rate close to 2%.
Under the forecasts, the euro zone will grow 2.1% this year after a 2.4% expansion in 2017.
The slowdown will continue next year when growth is expected at 1.9%, slightly below the previous estimate of 2%.
Although all euro zone states are expected to continue growing, in 2020 the bloc's economy will further reduce the pace of its expansion to 1.7%, the Commission said in its first estimates for that year.
Germany, the bloc's largest economy, is expected to expand by 1.7% this year after 2.2% growth in 2017, the Commission said, revising down its earlier estimate of 1.9%.
Next year German growth will be 1.8% instead of 1.9%. It will go back to 1.7% in 2020.
Growth forecasts were revised down also for France and Italy, the second and third-largest economies in the euro zone, with Italy remaining the worst performer in the common currency area.
Italy's growth is forecast at just 1.1% this year, 1.2% next year and 1.3% in 2020.
Italy's weak growth is partially matched only by Britain, which is not a member of the euro zone and will leave the EU in March.
The UK economy is estimated to expand by 1.3% this year and by 1.2% next, in line with previous forecasts. In 2020 growth is expected to remain at 1.2%.
Projections on UK growth are based on "a purely technical assumption" given the uncertain outcome of the Brexit negotiations, the Commission said.
The EU overall is forecast to grow 2.1% this year, 1.9% next year, and 1.8% in 2020.
Brexit is one of the risks for the euro zone and the EU economy that could worsen the forecasts.
The other main sources of uncertainties come from the US and Italy, according to the Commission's analysis.
Overheating of the US economy fuelled by "pro-cyclical fiscal stimulus" could lead to interest rates rising faster than expected, which would have numerous negative "spillover effects" beyond the US, the Commission said.
It also warned about the risks of trade tensions caused by the policies of the Trump administration.
The other risk is Italy, whose eurosceptic government is pursuing free-spending policies despite its high debt, which is estimated to remain stable at around 130% of gross domestic product until 2020, instead of significantly decreasing as required by EU fiscal rules.
"Doubts about the quality and sustainability of public finances in highly indebted Member States could spill over to domestic banking sectors, raising financial stability concerns and weighing on economic activity," the Commission said.