The Irish economy's performance this year is unlikely to equal that of last year, according to a new report. Although a soft landing is in prospect, there are some serious risks to such an outcome, it says.

Davy Stockbrokers' economist Mr Jim O'Leary says that chief among such risks is that the downturn in the US turns out to be more severe than expected. "Another risk . . . is that the Irish economy succumbs to an `IT shock' that would precipitate big job losses among Irish-based manufacturers of PCs and PC peripherals," he says in a new monthly economic briefing.

Mr O'Leary believes recession in the US should be averted, with economic activity picking up toward the end of the year.

He also notes that the two most obvious channels through which a US economic slowdown might affect the Irish economy are trade and foreign direct investment.

However, he says that because of the nature of Irish trade with the US, with much of it dominated by multinationals rather than indigenous firms, softer US demand should have rather limited effects on Irish economic activity. The effect of a US slowdown on foreign direct investment should be rather small, he says.

"Given that US firms locate in Ireland principally to serve European markets, it is the state of European demand, rather than US demand, that is key to US foreign direct investment flows generally."

However, Mr O'Leary says unemployment is close to its low point. He expects employment growth to slow to not much more than 2 per cent next year while the jobless rate should start to rise very slightly from around the middle of this year.