The Economic and Social Research Institute has said if more "extreme restrictions" in relation to Covid-19 can be avoided next year and a Brexit trade deal can be reached, there should be a strong recovery in the economy.
In its latest Quarterly Economic Survey, the ESRI also finds the main impact of the pandemic has been on workers in low paid jobs.
The ESRI expects the economy to rebound strongly next year by 6.3%. But it cautions that if Brexit happens without a trade deal, growth could be cut to 3.3%.
Its latest economic survey also highlights the divergent experiences of Covid-19 in the Irish economy.
Demand for medical and pharmaceutical goods rose during the pandemic, supporting the export sector, but consumer demand collapsed by 22% during peak lockdown.
This was the third biggest collapse across Europe and the UK and decimated services such as food and accommodation.
The knock-on impact on jobs has been huge with unemployment forecast to average 16.8% this year.
The Institute finds that most of the jobs lost have been concentrated in sectors with low wages.
The ESRI also notes the controversial "double Irish" tax avoidance technique will officially end this year and warns that could reduce future corporation tax receipts.
It also warns that some practices by multinationals both here and in the Netherlands distort Euro Area economic data and could add to pressure on Ireland to change its tax regime.