Stockbroker Davy has revised downwards its outlook for economic growth for next year but expects that the economy will avoid recession.
It says it now forecasts growth in Gross Domestic Product (GDP) to register at 3.5%, down from a previous estimate of 5.8%.
However, it expects GDP growth to come close to 10% for 2022.
The revised outcome for next year takes account of the negative impact that higher energy prices and general inflation are having on consumer spending and continued uncertainty form the war in Ukraine.
It comes against a backdrop of likely recession in the wider euro zone and UK economies, where consensus forecasts point to full year growth of 0.2% and minus 0.3% respectively.
"As in the Covid-19 pandemic, we expect Ireland's defensive export sector should still see robust growth - with exports up 7% - keeping Irish GDP growth in positive territory," Conall MacCoille, chief economist with Davy said.
The report describes the public finances as being in 'rude good health' due to soaring tax revenues, particularly under the corporate tax heading.
Davy is forecasting a surplus of €4 billion - or 0.8% of GDP - in 2022, growing to €9 billion (1.7% of GDP) in 2023.
That outcome is expected without the implementation of further policy measures.
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"The Irish government may well end-up adding further temporary support for Irish households and firms, following the €4 billion temporary measures announced for the winter in Budget 2023," Mr MacCoille said.
The stockbroker has revised downwards its forecasts for housing completions next year to 27,000, an outcome which, it believes, will constrain growth in the mortgage market to under 1%.
"The bigger picture though is that we see Ireland's housing market as relatively resilient given enormous pent-up demand and leverage/income gearing constrained by the mortgage lending rules," Mr MacCoille concluded.
Davy forecasts that house price inflation will slow to 6% by the end of the year and 3% next year.
