The coming year will be a turning point for the Irish economy. Growth will almost certainly slow - the only question being how fast.

Almost every year since the beginning of the boom, economists have said it will be the last year of growth, but so far the economy has continued to accelerate. This year may be the year that proves them right.

The global economy appears set on a downward trend. The US economy is slowing. How quickly and how hard or soft the landing are the only doubts. The UK economy also appears to have peaked while some commentators have fears for Asia.

Ireland is not immune to these influences. Exporters in particular are very reliant on global demand. However, there are few who believe this State will experience a hard landing.

Hard landings are generally triggered by an economic shock. The normal channels for this would be either employment or interest rates. It was interest rates hitting 15 per cent that sent the UK economy into a tailspin in the late 1980s. Another example was the fate of Boston in the US, which was hit by employment shocks as the defence industry closed down.

But in Ireland next year interest rates are unlikely to rise substantially and many analysts believe they may even have peaked. If not, only one more rate rise is expected and the European Central Bank may even cut rates towards the end of next year.

The prospect of an employment shock depends on the future of the US economy. If it comes in for a hard landing and tech companies begin to consolidate, it could mean layoffs in Irish subsidiaries. The Motorola job losses a few weeks ago underline this possibility.

On balance, most analysts expect the US economy to slow but not rapidly. In addition, IDA Ireland is now focusing on healthcare and e-commerce companies, which may prove more stable. The IDA says that 8,000 to 10,000 jobs will be lost this year, mostly in the lower end industries. It says the challenge is to find new industries to replace these.

There are also domestic pressures on the economy. The past year has been dominated by inflation, rising prices have led to industrial unrest and a renegotiation of the Programme for Prosperity and Fairness.

All of these pressures are still present and next year much will depend on the course of inflation as well as the labour market, which almost all commentators agree is the key domestic factor affecting the economy.

According to Dr Dan McLaughlin, chief economist at ABN Amro, a stabilising euro and lower oil prices should mean that inflation will be lower next year. In addition, he points to likely lower interest rates, which should push the inflation average just below 4 per cent in 2001. Of course, if oil prices rise again quickly or the euro resumes its slide, then inflation could average around 5 per cent.

Moderating inflation is the key, according to Mr Colin Hunt, head of research at Goodbody Stockbrokers. "If inflation does not fall all bets are off. If it does, it will moderate wage demands and there will be less industrial tension. Next year global growth is likely to be lower and the euro will probably be stronger. Both will impact on competitiveness. If wage rates also climb rapidly it could spell trouble," he said.

The Economic and Social Research Institute's Mr Danny McCoy also agrees the labour market will be the key factor this year. According to Mr Hunt, without sufficient extra staff coming on-stream, wage inflation will take off. Over time this will erode competitiveness and force the economy into a slowdown. According to Mr McCoy, if a combination of such events takes place, there could even be a recession.

"Even if inflation comes under control there will be problems with relativities between public sector workers. Bench marking with the private sector will not fix that," he says.

He also warns that in a regional economy in a monetary union things can turn quite quickly. Competitiveness losses could mean high wage growth is unjustified. "If there is a sharp turnaround in the euro and a slowdown in the US in 2001 the State will be exposed to possible recessionary shocks."

The big challenge, he says, is to ensure that pay is flexible.

In addition, according to Mr Hunt, significant numbers of women are needed in the workforce as well as large numbers of immigrants.

Last year only 7,000 of the 40,000 immigrants to the Republic were from outside the EU or US. However that figure was an increase on the 3,000 the previous year and if it continues to accelerate at that rate it could keep the economy on track.

Dr McLaughlin is also worried about labour supply. He points to the deteriorating quality of life, particularly in Dublin, which he says may put people off coming back. The IDA will be crucial to this. It is targeting the Objective One areas where there is still little significant development. If the IDA succeeds in bringing more projects to these areas it could mean higher growth as well as far more regional development in 2001 than many people expect.

Nevertheless, almost all commentators believe that the economy will continue to grow rapidly next year. Forecasts range from around 8 per cent to more than 9 per cent. However, it is 2002 that may be more open to question and there is a possibility growth will fall sharply then.

Continued rises in house prices are also expected. Auctioneer Mr Mark FitzGerald says house prices will rise 10 per cent this year and by about 15 per cent in Dublin. His brother Mr John FitzGerald, research professor at the ESRI, believes the stimulatory impact of the Government's recent spending and Budget decisions mean prices will go up by at least 15 per cent.

The top end of the market will continue to be very dependent on the equity markets, gains on which have been used to fund many of the more expensive houses in the Republic. Unless the Bacon Three measures discouraging investors are undone, rents will continue to soar, Dr McLaughlin warns. Mr Mark FitzGerald also believes a more tiered housing market is on the way, with homes close to town or good transport links accelerating more rapidly than those where commuting is difficult.

He too points to labour supply. "We really need more planners and engineers, particularly in the public service. If a deal has to be done for special pay awards then it should be done."

Future prosperity seems to be broadly in the Government's hands. Allow enough immigration and the economy will slow slightly. Not enough and wage increases and labour shortages could mean more of a bump.