The Economic and Social Research Institute has forecast that growth in the domestic economy, as measured by Modified Domestic Demand (MDD), declined from an annual rate of 10.2% in the second quarter of this year to 4.1% in the third quarter.

In a report, it said that 4.1% growth in MDD is strong on an historical basis but added it is also clear that growth is moderating from its peak of 14% in February.

It puts this down to higher inflation rates, declines in business and consumer sentiment and a slowdown in retail sales.

By contrast, the labour market remains strong as do tax receipts and industrial production, all of which are contributing to growth.

The ESRI said it intends to update its forecasts for Modified Domestic Demand monthly using its "Nowcast" forecasting model.